June 26 (Bloomberg) -- Sicily's Cosa Nostra imposed minimum prices for meat sold by Palermo butchers, police said today, after rounding up 12 alleged mobsters for extortion, mafia conspiracy and drug trafficking.

Alleged local mob boss Giancarlo Seidita -- or Giancarlo ``Sixfingers'' -- discussed meat- and food-price fixing during meetings held in a shack on the edge of town, according to a statement by the Carabinieri, the country's paramilitary police, who recorded the summits with hidden microphones and cameras. The boss also gave orders on extorting dozens of businesses and buying and selling cocaine, police said.

Mob extortion in southern Italy ``distorts the entire national market, and contributes to an unjustified increase in consumer prices,'' said Coldiretti, the country's agricultural lobby, in a statement after the arrests. Coldiretti said extortion inflated food prices by 7.5 billion euros ($11.8 billion) annually, citing a report by the national anti-mafia office in Rome.

Italian inflation rose to its highest in at least 11 years in May, driven by food and oil prices. Italian crime syndicates, including Cosa Nostra, together take in about 41 billion euros per year through extortion and other criminal activities, excluding drugs and arms sales, SOS Impresa, a Rome-based anti- mafia group, said in October.

Today's arrests followed 16 months of investigations by police, who extensively bugged the cars and homes of suspects to collect evidence, the statement said. The mafia didn't want a kilo of beef to cost less than 10 euros at the retail level, according to the investigation.

``The investigation proved that Cosa Nostra wants to interfere with the free market by imposing retail prices for primary consumer goods like meat,'' the Carabinieri said.

Revenue from extortion payments was invested in large shipments of cocaine, which was then sold locally by a network of dealers controlled directly by the mafia, police said.

To contact the reporters on this story: Steve Scherer in Rome at scherer@bloomberg.net

Last Updated: June 26, 2008 11:29 EDT