StarKist on the Hook for $100M Fine for Tuna Price-Fixing
StarKist, the country’s largest producer of canned tuna, was hit with a $100 million fine for its participation in a conspiracy that inflated prices for canned tuna. The judge handed down the sentence for the maximum fine allowed under the law on September 11, 2019.
StarKist’s sentence brings to a close the prosecution of the nation’s three largest canned tuna producers for their participation in a wide-ranging conspiracy to fix the price of tuna sold in the United States. The collusive conduct was uncovered in the course of a failed merger between the other two major tuna producers—Bumble Bee Foods LLC and Thai Union Group P.C.L., the parent company of Chicken of the Sea. The government’s investigation stemmed from suspicious documents produced by the proposed merger participants in response to a second request issued by the U. S. Department of Justice (DOJ).
Chicken of the Sea took advantage of the DOJ Antitrust Division’s leniency policy, under which the first member of a price-fixing conspiracy to approach the DOJ and give a full accounting of its illegal conduct receives a full pass on criminal prosecution for the company and its executives. Bumble Bee was previously fined $25 million for its role in the conspiracy.
StarKist’s efforts to lower the $100 million fine requested by the government were largely unavailing. In August, its attorneys argued that the company would not be able to afford both a nine-figure fine and the civil liability of companion private antitrust suits brought by consumers. The court, however, did not buy the argument. More recently, StarKist argued that the fine could force it to lay off workers and move its American manufacturing facility. StarKist stated in court that it employs about 100 people at its corporate headquarters in Pittsburgh and about 2,100 others at its American Samoa manufacturing facility. Its general counsel told the judge, “we’ll probably have to make some sort of cuts . . . . Maybe we move the facility from American Samoa to Thailand.” The judge determined that the maximum possible penalty was appropriate, concluding that the company could borrow funds if necessary and ask the court for an extension of time to make required payments.
The court was not entirely unmoved by StarKist’s efforts to limit the financial impact of its guilty plea. The judge did not order StarKist to pay restitution because StarKist is settling allegations of aggrieved purchasers through civil litigation. The court also acknowledged that it wanted to “safeguard people’s livelihoods” and allowed the fine to be paid over time: $5 million within 30 days of the court’s order, $11 million in 2020, and $21 million each of the following four years.
StarKist’s troubles are not yet over. Though many large purchasers of canned tuna have settled their cases against Starkist, other cases remain unresolved and could ultimately head for trial.