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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