Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Cargo shipping executive sentenced to five years in prison, fined for price fixing, (Dec 6, 2013)

By Jeffrey May, J.D.

A former executive of Florida-based coastal water freight transportation company Sea Star Line LLC has been sentenced to serve five years in prison and to pay a $25,000 criminal fine for his participation in a conspiracy to fix rates and surcharges for freight transported by water between the continental United States and Puerto Rico, the Department of Justice announced today (U.S. v. Peake, Criminal No. 11-512 (JAF)).

Following a two-week trial in January, Frank Peake was convicted by a federal jury in San Juan, Puerto Rico, for participating in the price fixing conspiracy. The jury found that Peake had been part of a conspiracy to fix rates and surcharges for water transportation of freight on the company’s routes between 2005 and 2008. Sea Star transports a variety of cargo shipments, such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico.

According to evidence presented at trial, Sea Star, Peake, and co-conspirators carried out the conspiracy by agreeing during meetings and communications to allocate customers of Puerto Rico freight services and to rig bids and fix the rates and surcharges to be charged to purchasers of water transportation of freight between the continental United States and Puerto Rico. The Justice Department said the conspirators also engaged in meetings for the purpose of monitoring and enforcing adherence to the agreed-upon rates and sold Puerto Rico freight services at collusive and noncompetitive rates.

“The sentence imposed today reflects the serious harm these conspirators inflicted on American consumers, both in the continental United States and in Puerto Rico,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division. “The Antitrust Division will continue to vigorously prosecute executives who collude to fix prices at the expense of consumers.”

The Justice Department’s investigation into anticompetitive conduct, including price fixing and bid rigging, in the coastal water freight industry is ongoing. Thomas Farmer, a former executive for shipping company Crowley Liner Services, was indicted in March for conspiring to fix prices. Farmer is scheduled to go to trial in May 2014.

Companies: Sea Star Line LLC; Crowley Liner Services

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