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Friday, June 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

California crabber accuses processor of price fixing

A Northern California fisherman claims Pacific Seafood squeezes out competition and leaves crabbers with only one buyer — Pacific Seafood.

SAN FRANCISCO (CN) — A Portland, Oregon seafood processor, the country’s largest, faces an antitrust class action over what the lead plaintiff says is an egregious case of price fixing in the West Coast’s increasingly unstable Dungeness crab market.

Fisherman Brand Little of Auburn, California, filed a putative class action Monday accusing the $945 million company with fixing the price of the highly sought after Dungeness crab, which is found along the coasts and bays between Central California and Alaska.

Little says Pacific Seafood, which is owned by Frank Dulcich, the grandson of the company’s founder, has “for at least the last four years, and likely substantially longer” fixed the prices paid to the region’s crabbers. That has in turn dramatically reduced the amount of money earned by the crabbers and priced out customers during the peak demand period while forcing them to buy frozen crab from the previous year, also supplied by Pacific Seafood.

The class accuses Pacific Seafood, which has 2,500 employees and processing and distribution outlets in 11 states and British Columbia, of creating a monopsony by squeezing out competition and leaving crabbers with only one buyer — Pacific Seafood. Little says the processor uses coercion through “group boycotts, dumping, tying, and falsification of official ex vessel price records — as well as its own illegal unilateral conduct, rather than through the development of a superior product, business acumen, or historic accident.”

With its traditional Nov. 15 start date, Dungeness crab season supplies a great many holiday tables on the West Coast. But the last five seasons have started six weeks late, this year due to low weights and later than usual whale migrations and making an already challenging profession even more so for struggling crabbers.

Little also accuses Pacific Seafood of squeezing out competitors, listing several processors purchased and shut down by the company since 1983. Those actions, he says, leave Pacific Seafood “as virtually the only purchaser of Dungeness crabs that other buyers cannot sell to retailers, restaurants, or similar customers [which] allows Pacific Seafood to unilaterally determine the price paid to those buyers for such crabs.”

The result is that buyers fall in line, knowing that if they offer the same prices to crabbers as Pacific Seafood, they’ll enjoy a 15- to 25-cent return when they further sell to Pacific Seafood, Little says.

“On the other hand, the other buyers know that if they offer a higher ex vessel price, the crabs that they do not sell to their retail, restaurant, and similar customers will only be sellable at loss to Pacific Seafood; and that is if Pacific Seafood agrees to buy them at all," Little says in the complaint.

Ex vessel prices are the prices crabbers receive directly for their catch, or the prices for the crab when first hit the supply chain.

Little says Pacific Seafood uses other methods to insure its grip on the market including “a variety of other illegal, anticompetitive, coercive, and fraudulent techniques to ensure compliance with its ex vessel price dictates.”

Little seeks treble damages to be determined at trial, in addition to orders barring Pacific Seafood’s coercive tactics and barring the company from purchasing crab in the Pacific Northwest. He wants a judge to order Pacific Seafood divest from or sell a number of their processing plants in the region “sufficient to reestablish competition in that segment of the Pacific NW Dungeness crab wholesale input market.”

He's represented by Stuart Gross with Gross Klein in San Francisco.

Dan Occhipinti, chief legal officer for Pacific Seafood, called Little's lawsuit "a completely baseless lawsuit filed by a fisherman who doesn’t do business with us and doesn’t know our company at all. We are confident it will be dismissed quickly."

Categories / Business, Consumers

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