- A federal judge in California has given StarKist Co. a $100 million fine and 13 months of probation for conspiring with other tuna companies to set U.S. prices on the canned product, Undercurrent News reported.
- StarKist, owned by South Korea's Dongwon Industries, pleaded guilty last fall and asked the judge for a $50 million fine because it has to compensate customers, retailers and others who have filed related civil lawsuits. However, U.S. District Court Judge Edward Chen said the statutory maximum fine of $100 million was appropriate in this case, and the company had not shown its financial condition justified a lower amount.
- Besides StarKist, the U.S. Justice Department filed felony antitrust charges against Bumble Bee Foods and Tri-Union Foods, doing business as Chicken of the Sea. Bumble Bee pleaded guilty in 2017 and was fined $25 million, according to The Wall Street Journal. Tri-Union was not convicted of a crime and avoided a fine because it blew the whistle on the other two, Undercurrent News said.
The tuna industry took another huge hit as the last of the three biggest canned tuna makers received its hefty fine in the price-fixing scandal. StarKist lawyers unsuccessfully argued it could result in bankruptcy and a potential loss of jobs for its 2,600 U.S. employees, but the company did receive a little reprieve by getting five years to pay the total at no interest.
The ruling comes at a time when tuna sales are down 4% by volume between 2013 and October 2018, according to market research firm IRI. Many processors are trying to entice consumers back with more sustainable options and flavors and with convenient pouched products. Some of these moves have been successful. StarKist told CNBC pouch sales were up 20% annually, and that the company sold more of them last year than it did of its most popular can size.
Judge Chen found StarKist appears have about $250 million in assets, although $155 million of it comes from a stake in a bottle manufacturer it has been trying to sell, according to Undercurrent News. It's not clear yet how much it may have to pay out in connection with the civil lawsuits, although some plaintiffs — including Walmart, Kroger and Giant Eagle — have already settled with the three tuna processors, the Pittsburgh Post-Gazette reported. StarKist paid $20.5 million to Walmart earlier this year to resolve its claims.
Competitor Bumble Bee was levied a $25 million fine in the same conspiracy case, although it was $111 million lower than federal prosecutors thought it should have been, according to CBS News. There were concerns, however, that the struggling tuna processor might be put out of business, so Bumble Bee was also allowed to make interest-free payments for five years. Those concerns apparently weren't idle ones since the company is reportedly considering filing for bankruptcy.
The ongoing publicity over the price-fixing case will undoubtedly affect the struggling tuna industry's reputation. StarKist's former senior vice president of sales, Stephen Hodge, pleaded guilty to one count of conspiracy to fix prices, and, according to Saving Seafood, two former Bumble Bee executives also pleaded guilty to conspiracy. Former Bumble Bee CEO Chris Lischewski was indicted on price-fixing charges in May 2017, but he pleaded not guilty and is awaiting trial.
There may be more similar news coming since the DOJ has signaled it is taking enforcement of antitrust laws seriously and is willing to push for higher fines from food companies found to have conspired to fix prices. Poultry producers facing similar allegations might be taking a closer look at what happened with StarKist, Bumble Bee and Tri-Union Foods for that very reason.