Starkist Hit With $100M Fine in Seafood Price-Fixing Scheme

FILE – In this June 30, 2008 file photo a StarKist brand product is seen on a grocery store shelf in Boston. StarKist agreed to plead guilty to price-fixing as part of a broad collusion investigation of the industry. Bumble Bee Foods last year pleaded guilty to the same charge and paid a $25 million fine. (AP Photo/Lisa Poole,File)

SAN FRANCISCO (CN) – Tuna giant Starkist must pay a $100 million criminal fine for conspiring to fix packaged seafood prices, a federal judge ruled Wednesday, despite arguments it could bankrupt the company or cause its employees to lose jobs.

“I think it’s in the interest of the economy not to bankrupt Starkist, but the court has the leverage to extend the payments out,” U.S. District Judge Edward Chen said during a sentencing hearing Wednesday.

Starkist general counsel and senior vice president Robert Scott Meece said the company has about 100 employees at its Pittsburgh headquarters and 2,100 working at a factory in American Samoa.

“These employees have had this hanging over their heads for a long time,” Meece told the judge.

The Starkist general counsel said a $100 million fine could force the company to move its factory from American Samoa to Thailand or carry out other cost-saving measures.

“There’s an onus on us to make those kinds of cuts,” Meece said.

Starkist reached a plea agreement with federal prosecutors in November 2018 on charges of conspiring with other companies to fix prices for packaged seafood from at least November 2011 to December 2013.

Starkist lawyer Niall Lynch, of Latham & Watkins, asked Chen to look at one of his client’s competitors, San Diego-based Bumble Bee Tuna, which paid a $25 million price-fixing fine in 2016. Bumble Bee is now considering bankruptcy, according to news reports, as it faces civil lawsuits for price-fixing and a separate class action over its “dolphin safe” labeling claims.

Starkist lawyers asked Chen to make half of the $100 million fine contingent on its financial performance, civil settlements and ability to liquidate its investment in the India-based can and bottle technology firm Techpack.

U.S. Justice Department lawyer Andrew Mast urged Chen to deny that request, noting that a government-hired expert projected sufficient revenue growth that will enable the company to pay its fine. He added that Starkist can also petition the court to modify its payment schedule if it faces financial hardship in the future.

The government proposed that Starkist pay $10 million up front, followed by five annual payments of $18 million.

Chen ultimately decided to make Starkist pay $5 million up front followed by an $11 million payment in 2020 and four annual payments of $21 million. The judge waived interest for those payments and imposed a 13-month probation period on the company.

Chen said he would not order the company to pay restitution because it faces hundreds of millions of dollars in civil liability for the anticompetitive scheme.

Starkist said in a statement Wednesday that it is committed to being a socially responsible company and strengthening its compliance programs.

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

 

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