Review of Industrial Organization 18: 5–21, 2001.
© 2001 Kluwer Academic Publishers. Printed in the Netherlands.
“Our Customers Are Our Enemies”: The Lysine
Cartel of 1992–1995
JOHN M. CONNOR
Department of Agricultural Economics, Purdue University, 1145 Krannert Bldg., West Lafayette, IN
Abstract. Prosecution of the lysine cartel signaled a resurgence in global price-ﬁxing conspiracies
in dozens of markets. It was the ﬁrst to enter the video age and set new precedents for large criminal
ﬁnes. This paper examines the sensitivity of overcharges generated by the cartel to several factors:
time period, seasonality of demand, and the price absent collusion. Civil settlements in the federal
class action (including the interrelated citric acid conspiracy) were the fourth highest in legal history.
Yet, overcharges of $65 to $134 million mean that buyers in the federal class received at most single
damages. The opt-out ﬁrms got double damages.
Key words: Antitrust law, Archer Daniels Midland, cartel, citric acid, Department of Justice, lysine,
The focus of this paper is on the role of economists and economic analysis in the
federal civil damages cases involving lysine price ﬁxing in the early 1990s. Before
examining the main topic, I think it is instructive to examine the history, structure,
and conduct in the lysine industry. To understand more fully the position of the
forensic economists working on the lysine damages in 1996 and 1997, one cannot
ignore the interplay of the economists’ tasks with the ongoing legal strategies.
Therefore, before examining the issues in the civil suit, there is a brief descrip-
tion of developments in the criminal price-ﬁxing cases. While I have examined
the lysine and citric acid cartels in other outlets (Connor, 1997a, 1998a, b), the
Prepared for delivery at a session of the Allied Social Sciences Association sponsored by the
Industrial Organization Society, New York City, January 5, 1999. No privileged information from
parties in legal actions has been used in preparing this paper. The author thanks Greg Werden for
providing several helpful comments on an earlier version of this paper. The quotation in this paper’s
title is the second part of an oft-repeated maxim used by ADM ofﬁces. The full phrase, “Our com-
petitors are our friends, and our customers are our enemies”, was ﬁrst cited by ADM Vice President
Mark Whitacre in a Fortune magazine interview in 1996. Precisely the same aphorism was repeated
by ADM President James Randall to Ajinomoto managers who were touring ADM’s lysine plant
in Decatur, Illinois on April 30, 1993. FBI Agent Brian Shepard testiﬁed that this phrase was often
repeated by several of ADM’s managers who were caught on tapes made for the FBI (Tr. 2904).