Big Three Conspire to Fix U.S. Tuna Prices,|Wholesaler Says in Antitrust Class Action

     SAN DIEGO (CN) – The “oligopolistic structure” of the nation’s three largest packed-seafood companies – StarKist, Bumble Bee and Tri-Union – helps them conspire to fix tuna prices, a class of wholesalers claim.
     Olean Wholesale Grocery Cooperative filed the federal complaint Monday against Bumble Bee Foods, Tri-Union Seafoods and StarKist. Tri-Union, the only name that may be unfamiliar to U.S. consumers, sells its canned fish under the trade name Chicken of the Sea. The complaint is the Top Download for Courthouse News today.
     Since at least July 24, 2011, Olean Wholesale claims, the food giants conspired to “fix, raise, maintain, and/or stabilize prices for PSPs [packaged seafood products] within the United States, its territories and the District of Columbia in violation Sections 1 and 3 of the Sherman Antitrust Act.”
     The three companies control 73 percent of the U.S. market: Bumble Bee 29 percent, StarKist 25.3 percent and Tri-Union 18.4 percent, according to the complaint.
     Packed seafood was a $2.3 billion U.S. market in 2011, $1.7 billion of it tuna, Olean Wholesale says, citing a Bumble Bee report.
     Tuna accounts for 73 percent of their market, and their dominance in “shelf-stable tuna” is even greater: StarKist with 34.6 percent, Bumble Bee 27.8 percent and Tri-Union 18.4 percent – 81 percent of the domestic market.
     All three companies are foreign-owned. The “oligopolistic structure” of the “highly concentrated” industry is the result of recent mergers and acquisitions, Olean Wholesale says. Dongwon, of South Korea, bought StarKist from Del Monte for $363 million in 2008. Tri-Union, of Thailand, bought King Oscar, a Norwegian canner, in 2014, and acquired, or tried to acquire Bumble Bee that year for $1.5 billion.
     The combination of Tri-Union and Bumble Bee “would have created a virtual duopoly, with the combined entity exceeding the market share of StarKist,” Olean Wholesale says.
     But on July 23, Thai Union Frozen Products, owner of Tri-Union, suspended a preferential public offering in light of a grand jury investigation.
     Thai Union Frozen Products announced that Bumble Bee and Tri-Union had received grand jury subpoenas in an antirust investigation, Olean Wholesale says. It claims that StarKist also received a subpoena, and that the Justice Department is investigating the entire domestic packed seafood industry.
     The subpoenas, Olean Wholesale says, are “significant.”
     “There are economic indications that support the conclusion that there was collusive pricing within the domestic PSP industry,” the company says.
     Olean, based in Olean, N.Y., says it bought packed seafood directly from one or more of the defendants, and “suffered pecuniary injury” from the antitrust violations alleged in the complaint.
     Consumption of packed seafood, particularly tuna, has declined nationally in the past decade, Olean says: Annual per capita consumption of packed seafood fell from 3.1 lbs. in 2005 to 2.3 lbs. in 2013.
     Given that decline, “one would expect rational businesses to reduce the prices for PSPs, but that did not happen,” the company says. It attributes that to the defendants’ collusion.
     “The prices charged by defendants to, and paid by, plaintiff and members of the class for PSPs were fixed, raised, maintained and/or stabilized at artificially high and non-competitive levels,” Olean says. “Plaintiff and members of the class have been deprived of free and open competition in the purchase of PSPs.”
     The defendant companies and their attorneys did not immediately respond to requests for comment Tuesday.
     Olean, founded in 1922, sells to retailers in western and central New York, western Pennsylvania and northeastern Ohio.
     It seeks class certification, costs of suit and treble damages for restraint of trade, under the Sherman Act.
     It is represented by Michael Lehmann with Hausfeld LLP, of San Francisco.

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