Select Committee on International Development Minutes of Evidence


ANNEX 3

ANTI-TRUST HISTORY OF CHIQUITA BRANDS

  Chiquita, formerly known as the United Brands Company (1970-90) and before that as the United Fruit Company Limited, came into existence in 1899. Since its inception, Chiquita has dominated banana production in Central America and banana marketing in the United States, European and latterly Japan. It is controlled by the giant American Finance Group, which has grossed capital assets of $25 billion.

  In this section we refer to "Chiquita" throughout, for simplicity.

  The core of Chiquita's fresh foods operation is the marketing, distribution and sourcing of bananas. According to the company's 1990 prospectus, Chiquita believed that, at that time, it sold more bananas than any of its competitos, importing approximately one-third of all bananas into its principal markets throughout the world. According to Chiquita's own figures, it sells in excess of 122 million boxes of bananas (or 2.25 million tons) each year and distributes its products in more than 40 countries.

1902 US CONGRESSIONAL INQUIRY

  As early as 1905, Chiquita had a dominant position in the banana market in the USA. The 1908 investigation arose following interference by Chiquita (by way, it is alleged, of armed intervention) with competitors outside the US jurisdiction. The American Banana Company brought an action for damages against Chiquita under the US Antitrust laws. This action failed because the abuses occurred in Panama and Costa Rica, which are outside the US jurisdiction.

1936 JAMAICAN BANANA COMMISSION

  In the post-World War I period, Chiquita had the Jamaican banana industry largely under its control. In 1923, 20,000 growers, alleging exploitation by Chiquita which refused to give them firm contracts for the sale of their fruit, formed the Jamaican Producers Association, which later became the Jamaican Banana Producers Association. The Association offered firm contracts to growers and increased prices to them. As a result, Chiquita was forced to do the same.

  In 1935, Chiquita made a bid to regain its dominance by offering to buy bananas in Jamaica at a price considerably higher than could be supported by their selling price abroad. The Association, which had slender resources, was unable to follow suit. As a result, thousands of banana growers who were contracted to the Association began to sell their bananas to Chiquita. The Association could not buy enough to fill their ships and so their freight costs increased, which in turn reduced the price that they could charge to the growers. By 1936, the Association was on the brink of bankruptcy.

  A petition was sent to the British Secretary of State for the Colonies, who responded by appointing a three-man commission to inquire into the matter. The commission, backed by the UK Government, recommended that Chiquita enter into an agreement with the Association, under which the two would pay growers the same price for their bananas according to a scale which varied with their selling price in the UK.

1954 US ANTITRUST COMPLAINT, AS AMENDED 1956

  Between 1908 and 1911, some properties and companies were sold by Chiquita under divestiture orders from the United States Government. Despite this, by 1954, Chiquita—with the exception of some land in Ecuador—owned, leased or otherwise controlled 85 per cent. of the land in the American Tropics suitable for banana cultivation. Due to Chiquita's aggressive policy of acquiring any competitors and owning/controlling all the viable production lands, the US government filed an Antitrust complaint against Chiquita under Section 4 of the Sherman Act and under Section 74 of the Wilson Tariff Act.

  In 1958, final judgment was entered against Chiquita. The judgement ordered substantial divestment by Chiquita of assets, limited the number of stems Chiquita was entitled to import into America and provided, inter alia, that Chiquita was restrained from, directly or indirectly—

    ". . . as to any existing contract, agreement or understanding with any grower of bananas . . . refusing a written request by the grower to cancel upon the same notice and the same conditions as provided above (six month's notice) with respect to new contracts".

    (e)  Extending the term of or renewing any contract, agreement or understanding with any grower of bananas in the American Tropics which gives United the right to purchase all or any stated part of the banana production of the grower for a period longer than one year unless the said contract, agreement or understanding contains a provision permitting the grower to terminate at any time after one year by giving United written notice six months advance and by paying to United, within the said six months, any debts which the grower may owe to United. . ."

  One of the other results of the order was that Chiquita was obliged to dispose of at least one third of its banana imports to an independent company. It was as a result of this that the Del Monte Corporation, the world's third largest exporter of bananas, achieved its foothold in the banana market. Chiquita complied with the 1958 "Consent Decree" by selling the Guatemalan Bananera Division (3,000 hectares) to Del Monte.

1973 ROYAL DECREE AGAINST BELGISCHE FRUITBEURS AND S A ETS. B M SPIERS AND SON

  This decree arose out of the decision of the Belgian "Conseil Contentieux" that Belgische Fruitbeurs had abused the monopoly they had over the importation of fruit into Belgium. Of the four companies that made up the Fruitbeurs, S. A. Ets. B. M. Spiers and Son was controlled by Chiquita.

Caribbean Banana Exporters Association

15 September 1997

1976 EC COMMISSION DECISION, 1978 EUROPEAN COURT OF JUSTICE JUDGMENT

  In December 1976, the Commission of the European Communities adopted a decision which found that Chiquita, having a dominant position in bananas in the European Community, had infringed Article 86 of the Treaty of Rome by:

    "(a) Requiring its distributors/ripeners in the Belgo/Luxembourg Economic Union, Denmark, Germany, Ireland and the Netherlands to refrain from re-selling its bananas whilst still green.

    (b)  By, in respect of its sales or Chiquita bananas, offering other trading parties, namely distributors/ripeners other than the Scipio group in the Member States referred to above, dissimilar prices for equivalent transactions.

    (c)  By imposing unfair prices for the sale of Chiquita bananas on its customers in the Luxembourg Economic Union, Denmark, Germany and the Netherlands (other than Scipio group).

    (d)  By refusing, from 10 October 1973 to 11 February 1975, to supply Chiquita bananas to Olesen A/s, Valdi, Copenhagen, Denmark."

  The European Court of Justice subsequently confirmed the decision, with the exception of item (c) above, which was overruled on the grounds that the Commission failed to answer some counter arguments made by Chiquita.

1992 EUROPEAN COMMISSION INVESTIGATION INTO CHIQUITA CLAIM TO RESTRICT USE OF "FYFFES" TRADEMARK

  In 1992, Chiquita was found by the European Competition Authorities to have yet again abused its dominant position by attempting, inter alia, to restrict Fyffes (in which it had recently sold its interest) from using its trademark "Fyffes" outside of the UK and Ireland.

  The objective of the abuse was to restrict Fyffes from competing in Continental Europe, outside its traditional market of the UK and Ireland.

EXCLUSION OF NEW ENTRANTS TO LATIN AMERICAN MARKET

  During the same period, considerable international controversy arose over attempts by Chiquita to exclude Fyffes from establishing a source of supply in Central America. Amongst the incidents widely reported were the derailing of trains carrying Fyffes bananas to the loading port and the boarding of ships carrying Fyffes bananas by armed militia. Certain aspects of the battles in Honduras are now the subject of litigation, including allegations against Chiquita of attempted kidnapping of a Fyffes representative.


 
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