Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Seafood producers charged with fixing prices of shelf-stable products, (Aug 4, 2015)

By Linda O’Brien, J.D., LL.M.

The three largest producers of packaged seafood restrained competition by engaging in a conspiracy to fix the price of shelf-stable seafood products, according to a complaint filed in the federal district court in San Diego, California (Olean Wholesale Grovery Cooperative, Inc. v. Bumble Bee Foods LLC v. ResMed, Inc., August 3, 2015).

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. Olean Wholesale Grocery Cooperative is a retailers’ cooperative that serves independent supermarkets.

The complaint states that PSPs are sold to club warehouses, retail groceries, grocery cooperatives, mass merchandisers, and drug stores. The packaged seafood industry is highly concentrated and Bumble Bee, Tri-Union, and StarKist are 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 has 25.3 percent.

According to the complaint, there are economic indications supporting the conclusion 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 account for the price increases, since the cost of tuna has declined substantially since 2013.

There were numerous business opportunities for the defendants to meet and engage in collusion. 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 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, the complaint alleges.

As a result of the defendants’ conspiracy to fix prices for PSPs, the plaintiff allegedly was required to pay more for PSPs that it would have paid in a competitive marketplace, and competition in the sale of PSPs has been restrained, suppressed, or eliminated.

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

The case is No. 3:15-cv-01714-JLS-MDD.

Attorneys: Michael P. Lehmann and Michael D. Hausfeld (Hausfeld LLP) and Arthur N. Bailey, Sr. (Arthur N. Bailey & Associates) for Olean Wholesale Grocery Cooperative, Inc.

Companies: Olean Wholesale Grocery Cooperative, Inc.; Bumble Bee Foods LLC; Tri-Union Seafoods LLC; StarKist Company

News: Antitrust CaliforniaNews