Mosaic named in lawsuit alleging price-fixing

  • Article by: CHRIS SERRES , Star Tribune
  • Updated: September 11, 2008 - 11:21 PM

The Plymouth firm was among fertilizer companies from Canada to Belarus accused in a federal suit of collusion in the potash market.

Mosaic and seven other large fertilizer companies are accused of price-fixing and collusion in a federal lawsuit filed Thursday in Minneapolis.

The suit, which seeks class-action status, accuses Plymouth-based Mosaic Co. of conspiring since 2004 with companies in Belarus, Canada and Russia to limit competition and drive up prices of potash, a mined mineral that is a key ingredient in fertilizer. Artificially high potash prices have hurt farmers, consumers and smaller fertilizer manufacturers worldwide, according to Richard Lockridge, a Minneapolis attorney who filed the lawsuit.

Potash prices have more than quadrupled over the past year, transforming little-known fertilizer companies into Wall Street darlings. Mosaic's stock price has skyrocketed from $42.84 a share a year ago to $85.60, though shares are down sharply from their high of $163.25 in June. Many economists and agricultural analysts have blamed the rising prices on a global commodities boom and increased demand for biofuels, which has encouraged farmers to plant more crops such as corn that demand large amounts of fertilizer.

The suit's plaintiff is Minn-Chem Inc., a Sanborn, Minn.-based maker of fertilizer for farmers and cooperatives that ceased manufacturing operations about a year ago in part because of high potash prices, Lockridge said.

Minn-Chem and other members of the class are seeking unspecified damages and a court injunction that would prevent Mosaic and the other potash suppliers listed as defendants in the case from continuing the alleged price-fixing conspiracy, according to the complaint.

Linda Thrasher, a spokeswoman for Mosaic -- the world's largest producer of potash and phosphate, another key fertilizer ingredient -- declined to comment Thursday, noting that the company's lawyers had not had a chance to thoroughly read the lawsuit.

Minnetonka-based Cargill Inc. owns a 65 percent stake in Mosaic.

Minn-Chem argues that the potash industry is "marked by a high degree of cooperation" among several large companies, which have overlapping ownership interests and cooperate through reciprocal visits to their production facilities. In addition to Mosaic, the lawsuit lists as defendants Agrium Inc. of Calgary, Alberta; Potash Corp. of Saskatchewan Inc.; JSC Uralkali of Moscow; RUE PA Belaruskali, of Soligorsk, Belarus; RUE PA Belarusian Potash Co. of Minsk, Belarus; JSC Silvinit of Solikamsk, Russia; and JSC International Potash Co. of Moscow.

The lawsuit claims that just six potash producers in Canada and the former Soviet Union account for about 70 percent of the world's market. The lawsuit also alleges that Mosaic, as well as Potash Corp. and Agrium, are equal shareholders in Canpotex Ltd., which acts as a common sales, marketing and distribution company for potash producers throughout the world. In addition, long-standing joint ventures in the potash industry have given these companies opportunities to discuss pricing and other market information, the lawsuit alleges.

No 'smoking gun'

Lockridge admitted that he does not have a "smoking gun" that would prove price-fixing or collusion, though the companies "did engage in an unusually and extensive amount of cooperative activities that would suggest an implicit gentleman's agreement not to compete on the basis of price."

This is not the first time that potash producers have been accused of violating antitrust laws.

Mosaic, along with other Canadian and U.S. potash producers, were accused of maintaining a price-fixing conspiracy in a number of class-action lawsuits filed in 1993. Mosaic, then known as IMC Fertilizer Group, said the claims were without merit and the lawsuits were dismissed.

Chris Serres • 612-673-4308

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