June 14 (Bloomberg) -- Roche Holding AG and BASF AG won a partial victory in their bid to limit the damage from a record vitamin price-fixing conspiracy, as the U.S. Supreme Court overturned a ruling permitting billions of dollars in new claims.

The justices, voting 8-0 in Washington, rejected one argument that non-U.S. customers were using to press an antitrust suit in American courts against Roche, BASF and 12 other onetime vitamin makers. Still, the justices said the purchasers might be able to pursue the case on different grounds.

The ruling may limit legal claims against a cartel that have yielded a record $4 billion in penalties since 1999, when Roche and BASF pleaded guilty in the U.S. to conspiring to fix prices on human and animal vitamins. Customers including an Ecuadorian fishery and an Australian pig farm are seeking to take advantage of the triple damages available only under U.S. antitrust law.

``It's a victory. Unfortunately the story is not yet totally over,'' said Denise Anderson, a pharmaceutical analyst at Kepler Equities in Zurich who recommends buying shares of Roche.

The high court said the U.S. Court of Appeals for the D.C. Circuit misapplied federal antitrust law when it let the suit go forward. The appeals court concluded that, because the cartel also damaged American purchasers, U.S. courts could consider suits by foreign buyers.

That ruling ``creates a serious risk of interference with a foreign nation's ability independently to regulate its own commercial affairs,'' Justice Stephen G. Breyer wrote for the high court.

Global Market

At the same time, Breyer said the foreign purchasers may still be able to argue that vitamin prices in the U.S. are intricately tied to those abroad. The non-U.S. purchasers say that, because bulk vitamins are commodities, the whole enterprise would have collapsed had prices not been fixed around the world.

``We're very pleased that the case will go forward,'' said attorney Tom Goldstein, who argued the case for the purchasers. ``The vitamins cartel will now be held accountable for the serious damage it caused to our economy and purchasers worldwide.''

Roche's head of corporate law, Bruno Maier, said the company was ``very satisfied'' with the ruling. ``We are confident that the only remaining argument will finally be decided in our favor,'' he said. Roche shares fell 1.5 Swiss francs to 126 Swiss francs in Switzerland.

BASF said in a statement it was ``confident that the company will continue to prevail'' in the case.

The decision has implications for an array of industries where companies have engaged in price fixing. The U.S. Justice Department in recent years has secured guilty pleas for fixing prices on electricity conductors, food additives, rubber chemicals and auction commissions. The government is investigating possible price fixing in the computer-chip business.

Largest Vitamin Maker

In May 1999 Roche and BASF pleaded guilty to taking part in a worldwide conspiracy to rig vitamin prices and agreed to pay a total of $725 million in criminal fines. Aventis SA escaped prosecution by agreeing to testify about the cartel, dubbed Vitamins Inc. by prosecutors.

Since that time, U.S. purchasers have recovered more than $2 billion from vitamin makers through civil lawsuits in U.S. courts.

Roche, a Basel, Switzerland-based drugmaker, was the world's largest vitamin maker until it sold that business to DSM NV. Roche retains legal responsibility for any price-fixing penalties.

Roche hasn't set aside any money for possible damages from the suit, Roche Chief Executive Officer Franz Humer said in April.

BASF, based in Ludwigshafen, Germany, is the world's biggest chemical maker. Aventis, with headquarters in Strasbourg, France, is that country's largest drugmaker.

Business groups urged the Supreme Court to bar suits by foreign purchasers, as did seven of the largest U.S. trading partners and the Justice Department, allying itself with the companies it once prosecuted.

Economists Weigh In

Several prominent economists, including Nobel laureate Joseph Stiglitz, argued that U.S. courts need broad jurisdiction over antitrust cases to ensure that companies are adequately deterred from fixing prices.

The high court case involved five companies, led by Empagran SA of Ecuador, that say they paid inflated prices for bulk vitamins used in animal feeds.

The companies sued include six others that pleaded guilty to U.S. price-fixing charges: Merck KGaA, Degussa AG, Lonza Group AG, Takeda Chemical Industries Ltd., Daiichi Pharmaceutical Co. and Eisai Co. Also sued were Akzo Nobel Chemicals BV, UCB SA, Sumitomo Chemical Co. Ltd., Tanabe Seiyaku Co. and Mitsui & Co.

Justice Sandra Day O'Connor didn't take part in the case. She owns shares of Procter & Gamble Co., which is seeking to bring a lawsuit on behalf of its foreign affiliates.

1982 Law

The central legal issue was a 1982 law, the Foreign Trade Antitrust Improvements Act, barring U.S. courts from considering antitrust cases that don't involve an effect on U.S. commerce.

In his opinion for the court, Breyer said the law prohibits suits that involve only ``independently caused foreign injury.''

Breyer said the court wasn't ruling on a separate legal theory by the purchasers. That argument said that, because vitamins are commodities, successful price fixing abroad requires higher prices in the U.S.

Herbert Hovenkamp, who teaches antitrust law at the University of Iowa and advised the defendants in the case, called the decision a ``big victory'' for the vitamin makers. ``I just don't see any way they are going to make a showing they were injured by domestic harm,'' he said.

Other lawyers said the decision boded well for antitrust plaintiffs.

Door Left Open

``Based upon the highly integrated and international operations of many recent cartels, the Supreme Court seems to leave the door fairly open for foreign purchasers'' to press claims in U.S. courts, said Washington lawyer Keith Shugarman, who has represented foreign companies in cartel investigations.

The ruling might help a dozen steel companies from Thailand, China and Australia press claims against makers of graphite electrodes who participated in a conspiracy to fix prices of the heat-resistant product used in steel smelting, said Ken Adams, a Washington lawyer who represents the steelmakers.

If the D.C. Circuit says foreign customers can sue over price- fixing that occurred in a global market, ``I would think our clients claims are going to be squarely within U.S. jurisdiction,'' Adams said.

The case is F. Hoffman-La Roche v. Empagran, 03-724.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: June 14, 2004 15:35 EDT