StarKist fined $100 mil­lion in canned tuna price-fix­ing case

The Morning Call - - BUSINESS CYCLE - By Olga R. Ro­driguez

SAN FRAN­CISCO — A fed­eral judge in San Fran­cisco has or­dered StarKist Co. to pay a $100 mil­lion fine in a canned tuna price-fix­ing con­spir­acy in­volv­ing the in­dus­try’s top three com­pa­nies.

The Pitts­burgh, Penn­syl­va­ni­abased com­pany was also sen­tenced to 13 months of pro­ba­tion.

The tuna gi­ant had asked U.S. Dis­trict Court Judge Ed­ward Chen to re­duce the fine to $50 mil­lion, ar­gu­ing a $100 mil­lion penalty could bank­rupt it be­cause it still faces mil­lions more in po­ten­tial civil dam­ages.

But Chen said the court found the com­pany has the as­sets, the abil­ity to bor­row money to pay the fine and a le­gal re­course to ask for an ex­tended pay­ment sched­ule if it runs into fi­nan­cial trou­ble.

He or­dered the com­pany to pay $5 mil­lion within 30 days and $11 mil­lion next year. Start­ing in 2021, the com­pany will have to make pay­ments of $21 mil­lion each year for four years.

“The goal of this court is to err on the side of pro­vid­ing some re­lief at the front-end to Starkist be­cause the next two years will be the cru­cial pe­riod, it seems to me,” Chen said.

StarKist Co. last year agreed to plead guilty to a felony price­fix­ing charge as part of a broad col­lu­sion that in­cluded Bumble Bee Foods and Chicken of the Sea.

“We have co­op­er­ated with the DOJ dur­ing the course of its in­ves­ti­ga­tion and ac­cept re­spon­si­bil­ity,” An­drew Choe, Starkist Co. pres­i­dent, said in a state­ment. “We will con­tinue to con­duct our busi­ness with the ut­most trans­parency and in­tegrity.”

The scheme came to light when Thai Union Group’s Chicken of the Sea at­tempt to buy San Diego-based Bumble Bee failed in 2015, ac­cord­ing to court records.

Chicken of the Sea ex­ec­u­tives then alerted fed­eral in­ves­ti­ga­tors, who agreed to shield the com­pany from crim­i­nal prose­cu­tion in ex­change for co­op­er­a­tion.

Bumble Bee Foods pleaded guilty in 2017 to the same charge and paid a $25 mil­lion fine, $111 mil­lion lower than pros­e­cu­tors said it should have been. Pros­e­cu­tors said they feared putting the fi­nan­cially strug­gling Bumble Bee out of busi­ness with a high fine and agreed to let the com­pany make in­ter­est-free pay­ments for five years.

Scott Meece, StarKist’s gen­eral coun­sel, ad­dressed the court be­fore the sen­tenc­ing, ask­ing the judge to con­sider the com­pany’s 2,600 U.S. em­ploy­ees.

“Th­ese em­ploy­ees have had this hang­ing over their heads for a long time,” Meece said. “They’re wor­ried about what is go­ing to hap­pen to their jobs.”

Meece said the com­pany will prob­a­bly have to make some cuts and could con­sider lay­offs or re­lo­cat­ing its Amer­i­can Samoa plant to Thai­land.

Chen said the com­pany, which is owned by South Korean com­pany Dong­won In­dus­tries, did not demon­strate by “pre­pon­der­ance of the ev­i­dence” that is un­able to pay the $100 mil­lion fine.

One for­mer StarKist ex­ec­u­tive and two from Bumble Bee have also each pleaded guilty to price­fix­ing charges. None has been sen­tenced.

For­mer Bumble Bee chief ex­ec­u­tive Christo­pher Lis­chewski has pleaded not guilty to a price fix­ing charge.

The three com­pa­nies face myr­iad law­suits from whole­salers, food ser­vice com­pa­nies and re­tail­ers such as Wal­mart, Tar­get and Kroger.

This “re­sult demon­strates our com­mit­ment to en­forc­ing the an­titrust laws ag­gres­sively against com­pa­nies that fix prices,” said As­sis­tant At­tor­ney Gen­eral Makan Del­rahim of the Jus­tice De­part­ment’s An­titrust Di­vi­sion.

STEPHANIE STRASBURG/PITTS­BURGH POST-GAZETTE 2018

A judge ruled StarKist must pay $16 mil­lion by the end of 2020 and $21 mil­lion an­nu­ally af­ter that through 2024.

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