A federal Judge in California has brought a small amount of closure to some of the claims alleged against tuna producers in the ongoing packaged seafood products antitrust litigation.
The cases started back in 2015 when dozens of actions were filed in courts across the nation alleging conspiracies regarding packaged seafood products. The United States Government also opened an investigation into the matter. In 2015, the DOJ reported that Chicken of the Sea and Bumble Bee had abandoned plans for a merger after the Department of Justice “informed the companies it had serious concerns that the proposed transaction would harm competition.” And since then, back in early December, CNN Money reported that an executive of one of the defendants was preparing to enter a plea.
The particular allegations of most complaints centered around price fixing and packaging size collusion for canned tuna, but also lumped in multiple general allegations relating to all “shelf-stable packaged seafood as including tuna, clams, crab, mackerel, oysters, salmon, sardines, and shrimp.” The specific allegations regarding canned tuna were that some of the defendants engaged in a conspiracy to reduce the standard tuna can size from 6 ounces to 5 ounces without a corresponding price reduction and increased the list prices for products sold at retail in the U.S. by similar amounts in 2012, and that the defendants colluded to not sell FAD-free (Fish Aggregation Device) products thereby allegedly ensuring that they “did not compete on the dimension of advertising the sustainably…caught nature of any of their branded tuna products.”
The Court’s opinion (you can find it here) dismissed the general claims as to collusion over “shelf-stable packaged seafood” but denied the motions to dismiss the tuna-only claims.
In fact, the Court’s discussion of the FAD-free allegations of the is indicative of how such agreements can be viewed once the microscope of a Sherman Act complaint is brought to bear on competitor behavior:
Three main market competitors entering an agreement to flatly refuse to offer an in-demand product under their primary brand evinces no other purpose than to horizontally restrict output in the most extreme sense, with an end result of stifling any potential competition between the flagship brands. But even if the alleged agreement is examined under the more exacting “rule of reason” standard, Defendants do not offer any pro-competitive reason for entering into the agreement, instead arguing that they simply each adopted a “common policy” that “had to do with product development.”
Of note in the evidence plead in the complaints that the plaintiffs look to as potential indications of a conspiracy are phone calls that industry players had with each other regarding issues or concerns with competitors promotional pricing and discussions and presentations that company executives gave at trade conferences – each of which serve as a lesson to the executives and managers in many industries that many behaviors and conversations that can be viewed as normal contact between competitors can be turned to potential evidence of outright, or implied conspiracies when prices and other competitor actions start to show a distinct commonality – or “parallel conduct”.