DOJ Merger Investigation Opened a Whole Can of Worms

Retailers and consumers may have been paying out the gills for canned tuna. The Wal-Mart family of stores has alleged a price fixing scheme for canned tuna in Arkansas federal court. Wal-Mart’s complaint casts a wide net, alleging that Bumble Bee Foods, StarKist, Del Monte Foods (former owners of StarKist) and Tri-Union Seafoods (owners of Chicken of the Sea) engaged in large-scale price fixing in violation of Section 1 of the Sherman Act. The defendants allegedly hatched the scheme between 2008 and 2010 and canned it in July of 2015.

According to Wal-Mart’s complaint, Bumble Bee, StarKist and Chicken of the Sea are big fish in a little pond, accounting for 80 to 85 percent of the market for canned tuna in the United States. According to the complaint, “they conspired to ensure they would stabilize and maintain their market shares in the packaged tuna market despite declining demand.” The complaint alleges that supply for packaged tuna has steadily increased since the 1960s, while demand has steadily decreased since the mid-1980s. However, “[d]espite changes in supply and demand that should have led to lower prices, [Wal-Mart] continued to pay higher prices for packaged tuna…This price increase scheme, which resulted in supracompetitive prices to [Wal-Mart], was the result of a conspiracy among the Defendants and their co-conspirators.”

Wal-Mart suggested that the defendants and their executives were overly chummy with one another, with senior executives meeting “at least twice annually and regularly discuss[ing] prices and shar[ing] sensitive customer information.” Additionally, the defendants used non-profits and trade associations as cover to circulate competitively-sensitive information. And when executives changed employers, they allegedly kept in touch with their former employers regarding major pricing decisions.

Last year, Tri-Union and its parent company, Thai Union, made waves when they attempted to acquire Bumble Bee. The parties abandoned the proposed merger after the Department of Justice (“DOJ”) expressed its concerns regarding the transaction. Wal-Mart’s complaint cites reports that the DOJ investigation found evidence of a tuna cartel, which serves as a classic example of the (tuna) meltdowns that can arise when producing documents in government fishing expeditions – the defendants may be on the hook for treble damages for the overcharges.