Government puts end to monopoly of $60M Arctic surf clam fishery

Companies spent years fighting to enter market dominated by Clearwater

The federal government has broken Clearwater Seafoods Inc.’s monopoly of the Arctic surf clam fishery, ending the company’s lucrative and exclusive hold on a sector that other companies have fought for years to enter.

On Thursday, the federal fisheries department announced a fourth licence for the Arctic surf clam fishery, representing 25 per cent of the total allowable catch for 2018. Applicants must be Canadian majority-owned and be an Indigenous entity located in one of the four Atlantic Provinces or Quebec. The new licence will be issued in 2018.

That means Halifax-based Clearwater will still hold three Arctic surf clam licences, or 75 per cent of the total allowable catch for 2018.

The federal government estimated the industry to be worth more than $60 million in 2015, when it increased the total allowable catch.

Clearwater, which sells lobster, scallops, shrimp, and other seafood, has dominated the fishery since it opened in the late 1980s, with a monopoly others sought to break.

Documents recently obtained through an access to information request reveal Clearwater’s efforts to preserve its monopoly. At one point, the firm warned the government about “biased and inaccurate” information presented by companies vying to open the fishery.

In March 2014, the Department of Fisheries and Oceans launched an independent review of the surf clam fishery in response to “ongoing questions” about the objectivity of the scientific information used to set policy within the fishery, as well as the quality and independence of the sector’s management by the federal government.

As Clearwater vice-president Christine Penney said in a July 30, 2014 letter to the department, there was an industry suggestion “that the Department, and by inference Clearwater, acted inappropriately in the science and management process for this fishery.”

“These allegations are absolutely unfounded,” she noted.

Companies interested in the sector’s future were invited to suggest documents that would help inform the two independent reviewers.

Some of Clearwater’s would-be competitors quickly criticized the review, suggesting that the company had helped select the reviewers. Stefan Leslie, then a Maritime regional director for Fisheries and Oceans Canada, rejected that suggestion.

In fact, Clearwater had its own concerns with the review.

In a July 28, 2014, letter to thenfisheries minister Gail Shea, Clearwater CEO Ian Smith criticized the inclusion of “questionable documents at the request of companies seeking access to this fishery.” Smith claimed the integrity of the review was being “compromised.”

In a slide show detailing its “responsible” management of the surf clam fishery, Clearwater proclaimed: “System is working!” The company also said the total allowable catch should not be “artificially” increased to create room for new entrants to the surf clam fishery. “Resource health is put at risk with a quota increase,” the company argued.

Clearwater also highlighted its pioneering in the surf clam industry, claiming it established the fishery in the mid-1980s, pioneered new markets, and invested heavily.

“The integrity of the independent review is being compromised by external parties seeking access to this fishery,” the company noted in the slide show documents.

Clearwater argued that it would be “forced to provide counter-evidence to the biased and inaccurate submissions of the other parties.”

Emails connected to the review also reveal the frustration harboured by companies shut out of the fishery.

A June 20, 2014 email from the Kennedy Group, which owns Louisbourg Seafoods Ltd., a Cape Breton family-owned seafood processor, noted: ” … the Kennedy Group’s battle for an Artic Surf Clam license (sic) … continued to be delayed and ignored even when the science revealed room for new entrants.”

On Thursday, Louisbourg Seafoods welcomed the end of Clearwater’s monopoly. Dannie Hansen, vice-president of sustainability, said the firm spent a “couple million dollars” over 10 years in fighting to break the monopoly.

Clearwater said it is analyzing the government’s decision.It declined a request for an interview.