CSL pays $68m to rid itself of US class action
An admittedly frustrated CSL chief executive Paul Perreault will pay $US64million ($68million) to settle a class action lawsuit in the US brought against Australia's biggest health care company, despite believing the case had no merit and was mired in "crap".
The decision will force CSL to take a $US39 million one-off charge to its fiscal 2014 full-year results, although the blood plasma group reaffirmed its profit guidance as provided to investors on the release of its latest earnings report in August.
It brings to an end a protracted four-year court battle that began under the leadership of former CSL boss Brian McNamee and which revolved around allegations that the company conspired with its major competitor in the US, Baxter International, to push up the prices of life-saving blood plasma from as long ago as the 1990s.
BusinessDay on Monday contacted Dr McNamee, who was unaware CSL had decided to settle the lawsuit, and he declined to comment other than to say Mr Perreault was doing a good job.
Mr Perreault, who grew up in the US, said the company had not made an admission of guilt but decided to settle to remove a major distraction to the company. "It removes a lot of management distraction and we can get on [with] running the business," he said.
"Just the depositions themselves were a huge distraction, weeks and weeks ... to go through depositions and hundreds and hundreds of pages of documentation that they pulled out and all the rest of it to try to prove their case.
"And you have all types of crap in there, just trying to get your way through."
He said it was also the best decision for shareholders. The lawsuit had cost CSL an average of $5 million a year since 2009 with counsel estimating the cost of a trial to be another $20 million.
"It stops the clock on our costs of this lawsuit," Mr Perreault said. "While we believe the lawsuit lacks merit, it could actually drag on for several more years with absolutely no certainty as to the outcome based on the way the US legal system operates."
Mr Perreault said he was frustrated about the decision to settle.
CSL believed the chances of US regulatory officials launching their own case against the company were very slim, given the US Federal Trade Commission raised allegations of cartel behaviour in the industry four years ago - naming CSL - and never took any action.