Cargill Inc. said Thursday that it would pay $24 million to settle a lawsuit alleging the company conspired with rivals to rig prices in the $3-billion U.S. market for corn-based sweeteners.
Wayzata, Minn.-based Cargill, the largest U.S. agricultural company, agreed to the payment because it would cost about that much to defend itself at trial, slated to begin Sept. 7, spokesman Bill Brady said. Codefendants Archer Daniels Midland Co. and A.E. Staley Manufacturing Co. said they planned to fight the allegations.
"It becomes a matter of weighing the risks versus the costs," Brady said. "We continue to maintain that we did not engage in any illegal activity."
Food companies including Coca-Cola Co. and PepsiCo Inc. filed a class-action lawsuit in 1995 alleging sweetener makers colluded in 1988 to fix the price of a corn syrup used in soft drinks, candy and baked goods. The allegedly coordinated price increases ended only after federal authorities charged Archer Daniels in 1995 with fixing the price of lysine, an animal feed.
Decatur, Ill.-based Archer Daniels, the world's largest grain producer, and closely held Cargill are the largest U.S. makers of high-fructose corn syrup. Archer Daniels' purchase of Minnesota Corn Processors in 2002 put it ahead of Cargill, which earlier that year acquired Cerestar, whose American Maize unit had been named in the suit.
"We're at the same place we've been," Archer Daniels spokesman Dwight Grimestad said. "We intend to defend the suit unless we can settle it on acceptable terms."
Archer Daniels paid a then-record $100-million fine in 1996 and three executives were sent to prison for conspiring to fix the price of lysine.
Chris Fox, a spokesman for A.E. Staley's parent, London-based Tate & Lyle, Britain's largest sugar maker, said the company planned to contest the suit. "We continue to deny any allegation of wrongdoing," Fox said.
Cargill's settlement has to be approved by U.S. District Judge Michael Mihm. The case will be tried in Peoria, Ill.