The customer is your enemy, the competition is your friend

Doug Henwood dhenwood at
Sat Jul 11 09:19:32 PDT 1998

[this bounced to me]

Date: Sat, 11 Jul 1998 09:45:24 EDT To: lbo-talk at Mime-Version: 1.0 Subject: Fwd: The customer is your enemy, the competition is your friend Content-type: text/plain; charset=US-ASCII Content-transfer-encoding: 7bit X-Mailer: AOL 3.0 for Windows 95 sub 76

Just wanted to forward this along, in case anyone missed it....


Subj: The competitor is our friend, the customer is our enemy Date: 98-07-10 15:13:19 EDT From: rob at (Robert Weissman) Sender: corp-focus at Reply-to: rob at To: corp-focus at (Multiple recipients of list CORP-FOCUS)

When you hear politicians blather about free markets, point them to Chicago, where three former executives of Archer Daniels Midland (ADM) are in federal court this week to face criminal charges of destroying markets.

The three former ADM executives, Michael Andreas (son of Chairman Dwayne), Terrance Wilson and Mark Whitacre have been charged with meeting with competitors to fix the prices and sales volume of the feed additive lysine.

A fourth executive, Kazutoshi Yamada, of the Ajinomoto Company, was also charged in the conspiracy to fix prices. But Yamada will not appear at the trial in Chicago to face the charges. When asked why Yamada is not being extradited, federal officials reply with a limp "no comment."

ADM and a number of other companies have already admitted their criminality and paid tens of millions of dollars in fines.

The price-fixing fits well with chairman Dwayne's philosophy on markets. As he put it to his son Michael -- "The competitor is our friend and the customer is our enemy."

"There isn't one grain of anything in the world that is sold in a free market," Dwayne told a reporter from Mother Jones in 1995. "Not one! The only place you see a free market is in the speeches of politicians. People who are not from the Midwest do not understand that this is a socialist country."

The extent of the price-fixing was laid out earlier this year by federal prosecutors in a little noticed pre-trial proffer filed in Chicago.

The document quotes extensively from video and audio tapes made by former ADM executive turned FBI mole turned convict Whitacre. (Whitacre was convicted earlier this year of stealing millions of dollars from ADM, even though he claimed that the money was off-the-books compensation.)

The proffer is startling in its scope. It contains within its 57 pages perhaps the most concentrated proof of corporate criminality ever assembled by a federal agency.

The document, which was compiled by the Justice Department's James Griffin, argues that the agreement to fix prices was hammered out at a series of meetings, beginning with a meeting in Mexico City on June 23, 1992.

The proffer contains large excerpts from tape recordings made by Whitacre when he was a mole for the FBI. The excerpts are riddled with expletives.

According to Griffin's proffer, the government will prove at trial that at the Mexico City meeting, Wilson told other lysine producers "we are not cowboys, we should be trust(ing) and (have) competitive friendliness." Wilson points out that low lysine prices were benefitting the customers rather than the manufacturers.

After the Mexico City meeting, the companies agreed to raise the U.S. price of lysine without reaching an agreement on holding down volume. As a result, the price of lysine increased throughout the summer.

Another meeting was held in Paris in October 1992. After the Mexico City and Paris meetings, the price of lysine increased in some places, but not everywhere. The companies blamed each other for this, they began to bicker and prices dropped.

A third meeting was held in Decatur, Illinois -- home to ADM -- on April 30, 1993.

Prior to the Decatur meeting, Andreas and Whitacre had several strategy sessions, all of which were taped.

Wilson and Andreas contended that ADM's sole promise to the other producers in 1992 was to lower its lysine volume only if the producers were able to maintain the higher lysine prices they had agreed to.

During one such conversation, Andreas advised Whitacre: "You could just say to [Yanamoto, a Japanese competitor] look, these prices are so shitty .. and you guys are so disorganized that I don't know what kind of shit you're managing."

At a March 10, 1994 meeting in Hawaii, the producers complained about each others' cheating on the fixed prices. Wilson laid out his price-fixing philosophy:

"We are gonna get manipulated by these God damn buyers. . .They can be smarter than us if we let them be smarter ... They are not your friend. They are not my friend. And we gotta have 'em. Thank God we gotta have 'em, but they are not my friends. You are my friends. I wanna be closer to your than I am to any customer 'cause you can make us ... money."

The competitor is our friend, and the customer is our enemy.

God Bless America.

Russell Mokhiber is editor of the Washington-D.C. based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor.

(c) Russell Mokhiber and Robert Weissman

Focus on the Corporation is a weekly column written by Russell Mokhiber and Robert Weissman. Please feel free to forward the column to friends or repost the column on other lists. If you would like to post the column on a web site or publish it in print format, we ask that you first contact us (russell at or rob at

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