Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Former Shipping Company Executive Indicted for Participation in Puerto Rico Maritime Freight Price Fixing Conspiracy, (Mar 22, 2013)
Organizations Mentioned:U.S. Department of Justice
By Tobias J. Gillett, J.D., LL.M.
A federal grand jury has returned an indictment against a former shipping company executive for his alleged role in a conspiracy to fix prices for maritime freight between the continental United States and Puerto Rico, the U.S. Department of Justice has announced.
The indictment, filed in the federal district court in San Juan, Puerto Rico, charges Thomas Farmer with conspiring, from at least as early as mid-2005 until at least April 2008, to fix rates and surcharges for freight shipment between the United States and Puerto Rico in order to suppress and eliminate competition. Farmer is the former vice president of price and yield management at the Jacksonville, Florida company Crowley Liner Services.
Crowley Liner Services carries cargo, including heavy equipment, perishable food products, medicines, and consumer goods, between the continental United States and Puerto Rico. Crowley Liner Services itself pled guilty to participating in a price fixing conspiracy in July 2012, and agreed to pay a $17 million fine.
The indictment alleges, among other claims, that Farmer participated in the price fixing conspiracy by attending meetings and engaging in conversations and communications to fix, stabilize, and maintain rates and surcharges for Puerto Rico freight services; to allocate customers of Puerto Rico freight services between and among the conspirators; and to rig bids submitted to customers of Puerto Rico freight services. The indictment charges Farmer with price fixing in violation of the Sherman Act, a charge carrying a potential maximum penalty of 10 years in prison and a $1 million fine for individuals. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
“Today’s indictment charges this executive with participating in a price-fixing conspiracy that affected the cost of shipping many consumer goods to Puerto Rico,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously pursue individuals who engage in anticompetitive behavior.”
The indictment represents the latest development in the Justice Department’s ongoing investigation into anticompetitive conduct, including price fixing and bid rigging, in the coastal water freight industry. As a result of the current investigation, three companies, including Crowley Liner Services, and six individuals have pled guilty or been convicted at trial. Five of the individuals and the three companies have received sentences ranging from seven months to four years in prison, and fines of more than $46 million.
On January 30, 2013, the sixth individual, Frank Peake, a former executive at Sea Star Line LLC, was convicted at trial for his participation in the price fixing conspiracy, and is scheduled to be sentenced on May 31, 2013.
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