Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Packaged seafood producers allegedly fixed prices of shelf-stable seafood products, (Mar 16, 2016)

By Linda O’Brien, J.D., LL.M.

The three largest brand name producers of packaged seafood engaged in a conspiracy to fix the price of shelf-stable seafood products within the United States, according to a complaint filed in the federal district court in San Diego, California (John Gross & Company v. Bumble Bee Foods LLC, March 14, 2016).

Bumble Bee Foods, Tri-Union Seafoods, and StarKist are the largest producers and processors of packaged seafood products, including shelf-stable products (PSPs) such as tuna that is sold in cans, pouches, and ready-to-eat serving packages. Tri Marine International operates a fish processing plant in San Pedro, California, and supplies processed tuna to packaged seafood producers. John Gross & Company is a full line foodservice distributor, providing fresh meats, seafood, produce, coffee, dry goods, beverages, and refrigerated and frozen foods to businesses in Pennsylvania.

The complaint alleges that PSPs are sold to club warehouses, retail groceries, grocery cooperatives, mass merchandisers, and drug stores. The packaged seafood industry is highly concentrated, with Bumble Bee, Tri-Union, and StarKist being the largest domestic manufacturers of PSPs. In 2011, Bumble Bee had 29 percent of the domestic shelf-stable seafood market, Tri-Union had 18.4 percent, and StarKist had 25.3 percent.

According to the complaint, economic indications show that there was collusive pricing within the domestic PSP industry. Consumption of PSPs, particularly canned tuna, has declined in the United States over the last ten years. Although there was a decline in consumption, the prices for PSPs were not reduced. In fact, the average prices of shelf-stable seafood products have steadily risen from 2005 through 2015. Raw material costs do not adequately explain the price increases, since the cost of tuna has declined substantially since 2013, the plaintiff claimed.

There were numerous business opportunities for the defendants to meet and engage in collusion, according to John Gross. One such opportunity was the National Fisheries Institute Tuna Council, which represents the largest processors of canned and pouch tuna in the U.S. The defendants allegedly cooperated to provide funding for an advertising campaign designed to increase consumption of tuna. Another opportunity to collude was provided through bilateral copacking agreements between Bumble Bee and Tri-Union. Tri Marine—which partnered with Bumble Bee Foods, Tri-Union Seafoods, and StarKist—provided a conduit for the exchange of price information, the complaint alleges.

As a result of the defendants’ conspiracy to fix prices for PSPs, the plaintiff was deprived of free and open competition in the purchase of PSPs and was required to pay more for PSPs than it would have paid in a competitive marketplace absent the defendants’ price fixing conspiracy, the complaint charged.

The plaintiff asserts claims for violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre-judgment and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:16-cv-00635-JLS-MDD.

Attorneys: Allan Steyer, D. Scott Macrae, and Jill M. Manning (Steyer Lowenthal Boodrookas Alvarez & Smith LLP) for John Gross & Company.

Companies: John Gross & Company; Bumble Bee Foods LLC; Tri-Union Seafoods LLC; StarKist Company; Tri Marine International, Inc.

News: Antitrust CaliforniaNews