Bumble Bee Foods, Chicken of the Sea, Starkist senior executives were involved in price-fixing, Wal-Mart suit alleges
5 June 2017. By Leah Nylen.
For nearly a decade, senior executives at Bumble Bee Foods, Chicken of the Sea and Starkist allegedly conspired to fix prices on canned tuna. Through e-mail exchanges, faxes and sometimes in-person dinners, the companies are alleged to have coordinated price increases and decreased package sizes, with the knowledge and sometimes at the direction of executives at Thai Union Group, Chicken of the Sea's owner, and Starkist's parent companies, Del Monte and later Dongwon Industries.
As a result of the alleged conspiracy, the three tuna companies earned hundreds of millions of dollars in profits more than they might otherwise in the $1.7 billion US market for canned tuna.
Those details are contained in a federal antitrust complaint filed by Wal-Mart Stores against the three tuna companies and their owners. The 90-page complaint was filed on May 12 in San Diego federal court. Wal-Mart's lawyers redacted some of the allegations from a printed version of their complaint but left them intact in the document's electronic iteration.
The US Department of Justice has acknowledged that it is investigating criminal antitrust violations in the canned seafood industry. Last month, Bumble Bee agreed to plead guilty and pay a fine between $25 million and $81.5 million. Two Bumble Bee executives — Walter Scott Cameron and Kenneth Worsham — also have agreed to plead guilty.
Last week, Stephen L. Hodge, the former senior vice president of sales at Starkist, was charged with price-fixing.
Cameron, Hodge and Worsham are all mentioned several times in the redacted portions of Wal-Mart's complaint. Cameron is featured prominently for an instance in which he is said to have snuck into the office of another tenant in the same building as Bumble Bee to send a fax anonymously to a contact at Starkist.
In its complaint, Wal-Mart said that Chicken of the Sea — owned by Thai Union Group — has acknowledged it applied for leniency from the US Department of Justice, which offers complete immunity from prosecution to the first member of a cartel to come forward and admit to antitrust violations.
According to Wal-Mart's complaint, the conspiracy began in 2004 when Chicken of the Sea's then-president, Dennis Mussell, instructed the company's sales team to feel out rivals Bumble Bee and Starkist, then owned by Del Monte, on price increases. Mussell also communicated regularly with Bumble Bee CEO Chris Lischewski and Starkist CEO Don Binotto.
That summer all three companies increased prices by 10 percent, Wal-Mart said in its complaint.
The companies allegedly again engaged in discussions about raising prices in 2006, with Bumble Bee's Lischewski and Chicken of the Sea's new CEO John Signorino, speaking several times on the phone and meeting for dinner.
In December 2007, according to the complaint, Starkist informed individuals at Chicken of the Sea that it wanted to downsize to five-ounce cans from its current six-ounce cans.
In order for such a move to be successful, the other companies would also need to decrease their package sizes.
Over the next several months, the companies allegedly had several communications about downsizing packaging along with several in-person meetings. The complaint said one such meeting at a restaurant in Del Mar, California, was attended by Lischewski and Shue Wing Chan, who took over as Chicken of the Sea's president and CEO in November 2007.
All three companies eventually agreed to the downsizing by April 2008, according to Wal-Mart.
The companies continued to coordinate price increases in 2010, 2011 and 2012, according to the the complaint.
Executives at Thai Union Group were alleged to have been highly involved in the downsizing discussions. Chan consulted with company chairman Cheng Niruttinanon and Thiraphong Chansiri, its president and CEO, and briefed them on updates, the complaint said.
In mid-2008, Del Monte sold Starkist to South Korea's Dongwon Industries. Del Monte continued to operate the company for Dongwon through 2010. According to Wal-Mart's complaint, Dongwon approved of the conspiratorial agreement and agreed it would continue with the plan to reduce can size.
Top executives at Dongwon, a vertically integrated fishing conglomerate that owns the world's largest fishing fleet, were aware of and sometimes participated in the conspiracy, Wal-Mart claimed. Starkist's CEO allegedly provided monthly reports to Dongwon Chairman Jae-Chul Kim with information on rivals' pricing and the conspiracy's progress. Kim also is alleged to have reached out to Bumble Bee's Lischewski to arrange a meeting to discuss cooperation in 2014.
Wal-Mart's complaint estimated that Dongwon received more than $100 million in conspiracy proceeds from Starkist between 2009 and 2015. Chicken of the Sea also gave more than $100 million in conspiracy proceeds to Thai Union Group each year, the retailer alleged.
Representatives of Thai Union Group and Dongwon Industries didn't respond to a request for comment.
Spokeswomen for Bumble Bee and Starkist declined to comment, with both citing the pending litigation.