Who Knew There Was So Much Drama In The Canned Tuna Industry?
Compact discs, perfume, liquid crystal display panels and canned tuna. All of these have one unlikely thing in common - a history of price fixing. In the United States, price fixing can be prosecuted as a criminal federal offense under Section 1 of the Sherman Antitrust Act.
In August 2015, a class-action lawsuit filed in a federal court alleged that the three major U.S. tuna producers—StarKist, Bumble Bee Foods and Tri-Union Seafoods—colluded to inflate prices for years. Olean Wholesale Grocery Cooperative claimed the three companies conspired to "fix, raise, maintain, and/or stabilize prices for PSPs [packaged seafood products] within the United States, its territories and the District of Columbia in violation Sections 1 and 3 of the Sherman Antitrust Act" since 2011.
At the time of the lawsuit, the three companies controlled 73% of the $1.7 billion U.S. canned tuna market. Tri-Union and Bumble Bee had been in discussions to merge when the lawsuit was filed, which would've created a duopoly. The merger was abandoned less than four months after the lawsuit was filed, with the United States Department of Justice's Antitrust Division saying "Consumers are better off without this deal."
In 2017, Bumble Bee pleaded guilty to price fixing and was ordered to pay a $25 million fine. The DOJ had agreed to a fine $111 million lower than initially sought after Bumble Bee said a larger penalty could cause the company to go bankrupt.
Apparently, $25 million could as well. Just last month, Bumble Bee filed for Chapter 11 bankruptcy protection as a result of "recent and significant legal challenges." The company sold its assets to its largest creditor for $925 million and expects to continue operations uninterrupted.
In 2018, Starkist pleaded guilty to conspiring to fix prices for canned tuna and paid a $100 million fine earlier this year. Starkist's request to pay a lower fine was declined as the company's financial circumstances didn't justify a lower penalty.
Tri-Union, which was the whistleblower on the price-fixing scheme, received conditional leniency under the DOJ's Corporate Leniency Program. In exchange for providing information to assist the investigation, neither the company or its employees would face any prosecution.
Other than civil lawsuits that may drag on for a while, the scandal appears to be closing its final chapter as Chris Lischewski, the former CEO of Bumble Bee Foods, was found guilty this week for his role in the scheme. Lischewski allegedly conspired with colleagues and executives at Bumble Bee's competitors on a "peace proposal" intended to boost prices and meet earnings targets. Lischewski faces a maximum of 10 years in prison and a $1 million fine, according to the indictment.
While this is not the first or last time companies will be busted for price-fixing, it's an interesting reminder of the lengths people will go to make money, even in industries as mundane as selling canned tuna.
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