StarKist settles price fixing claims with Walmart for $20.5M
- StarKist Co. announced it has settled antitrust claims with Walmart for $20.5 million. Walmart claimed that StarKist, Bumble Bee Foods and Tri-Union Seafoods, which does business as Chicken of the Sea, conspired to fix tuna prices for more than 10 years. StarKist said the settlement resolves all price-fixing claims from Walmart, the largest canned tuna retailer in the U.S.
- "StarKist is committed to being a socially responsible company and we are pleased to resolve this lawsuit with our largest customer under fair and reasonable terms," Andrew Choe, StarKist's president and CEO, said in a release. "We will continue to conduct our business with the utmost transparency and integrity, and we hope to resolve the remaining lawsuits with our other customers under similarly fair and mutually beneficial terms."
- StarKist pleaded guilty to a charge of price-fixing in October, following an investigation from the U.S. Department of Justice Antitrust Division that began in 2015. The Pittsburgh-based company could face a fine of up to $100 million, but that will be determined at a sentencing hearing.
It's not surprising that StarKist would want to settle these price-fixing charges with Walmart, the country's biggest retailer and the company's largest customer. Chicken of the Sea previously settled related claims with Walmart, and Bumble Bee has pleaded guilty as part of the Justice Department's investigation.
For StarKist, which is owned by Dongwon Industries of South Korea, there are still some unresolved issues. One is the Justice Department's fine, and the other is the potential reputation hit from former Senior Vice President of Sales Stephen Hodge's guilty plea on one count of conspiracy to fix prices. According to Saving Seafood, two former Bumble Bee executives also pleaded guilty to conspiracy. Former Bumble Bee CEO Christopher Lischewski was indicted on price-fixing charges in May 2017, but he pleaded not guilty.
SeafoodSource reported the DOJ's investigation began after Chicken of the Sea's parent company tried to buy Bumble Bee in 2015. Two years later, Chicken of the Sea admitted to having blown the whistle on the price-fixing scheme — a move which led to the DOJ inquiry and prosecution of Chicken of the Sea's two main canned tuna competitors.
All three companies are probably anxious to put legal challenges behind them and emphasize ways to boost sales of tuna products, which have been flagging in recent years. Consumers are increasingly rejecting canned and packaged tuna and wanting more convenient protein options. According to market research firm IRI, tuna sales fell 4% by volume between 2013 and October 2018. As a result, tuna producers are developing packaging such as pouches that don't need a can opener, as well as more sustainable premium options and flavors designed to attract millennials.
According to data from Statista, overall tuna consumption dropped from 2011 through 2018, although StarKist and Bumble Bee have seen growth in the past three years while Chicken of the Sea has fallen. The Wall Street Journal recently reported that even though the big three tuna companies control 80% of sales, the industry continues to shrink as millennials look for more sustainable brands and fresh or frozen fish instead of canned.
To snag new and former consumers and keep them coming back, tuna processors need to show they're responding to trends and eschewing price-fixing practices and corresponding fines. That means producing handy, protein-rich items that are also tasty — with price tags that can accommodate most budgets.
Unfortunately, the U.S. tuna industry isn't the only one that's faced price-fixing charges. Some of the country's largest chicken producers have also been accused of collusion in setting prices, as have milk producers and major players in the pork industry. Consequently, there may be more settlements as such cases move through the legal system — and companies decide to put their efforts into selling more products and tallying up profits.