Tate & Lyle pays $100m to settle corn syrup lawsuit
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Your support makes all the difference.Tate &Amp; Lyle yesterday agreed to pay out $100m (£55m) to settle price-fixing allegations in a US lawsuit that would have left it facing a potential claim of nearly $5bn (£2.7bn).
Tate &Amp; Lyle yesterday agreed to pay out $100m (£55m) to settle price-fixing allegations in a US lawsuit that would have left it facing a potential claim of nearly $5bn (£2.7bn).
The sugar and sweeteners group admitted no liability over the US case, but its Staley business was forced to settle after the two other companies named in the long-running case agreed to payouts earlier this year.
It was alleged that Tate & Lyle, Cargill and Archer Daniels Midland (ADM) conspired to fix the price of high fructose corn syrup, a sweetener used in carbonated soft drinks. The claims related to a period between 1988 and 1995.
In 1999, after the three companies were cleared of criminal activity, they were hit by a $1.4bn civil lawsuit from their customers, US food and beverage manufacturers.
Cargill agreed this year to settle the civil suit for $24m and then ADM paid out $400m. That left only Tate & Lyle, led by chief executive Iain Ferguson, still contesting the claim but, as the only defendant, it was liable for three times the original claim, plus three times legal costs. If the case had gone against Tate & Lyle, a maximum award of almost $5bn, a crippling sum, could have been made against it.
Robert Gibber, Tate & Lyle's general counsel, said: "We deny emphatically involvement in any wrongdoing and believe we were in a position to demonstrate this at trial. However, a jury trial would have exposed Staley to a degree of risk which could not be justified."
Legal experts said that the lower burden of proof required in civil cases, together with the uncertainties of a jury trial, would have weighed on Tate & Lyle. After tax deductible, the cost to Tate & Lyle of the climb-down will be $60m.
The news on the settlement and a positive trading update, also issued by Tate & Lyle yesterday, saw the company's shares close up 4 per cent at 320p. Analysts welcomed the lifting of uncertainly from the suit.
The group will hold its annual general meeting in London today, which will see it accused by the charity Oxfam of benefiting by millions of pounds from European Union sugar subsidies at the expense of farmers in the developing world. The company contends that it pays farmers from poor countries three times the world price for raw sugar.
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