What the Tuna Price Fixing Fallout Means for Consumers
Last Thursday, the U.S. Department of Justice announced that canned tuna giant StarKist pled guilty to a felony price fixing charge—essentially representing the final shoe dropping in what has been an ongoing investigation into collusion claims against the three largest players in America’s canned tuna market.
The dominos began to topple in 2015 when Chicken of the Sea, owned by Thai Union Group, attempted to buy out the San Diego-based Bumble Bee in a move that Thai Union hoped would push it past industry leader StarKist, which is owned by South Korea’s Dongwon Industries. However, concerned that the canned tuna market was “not functioning competitively” even before this proposed acquisition, the Department of Justice began to dig into allegations of collusion. Eventually, Chicken of the Sea agreed to work with the feds, reportedly in return for protection from criminal prosecution. As a result, Bumble Bee pled guilty to price fixing in May 2017, and now, StarKist has followed suit.
StarKist now faces a fine up to $100 million as a consequence for this price fixing which was said to have occurred from November 2011 to December 2013. In 2017, Bumble Bee was hit with a more lenient $25 million penalty over fears a larger fine could put the already-struggling company out of business.
In announcing the plea agreement, the DOJ spoke to the effect price fixing can have on shoppers financially. “The conspiracy to fix prices on these household staples had direct effects on the pocketbooks of American consumers,” Makan Delrahim, an assistant attorney general in the Justice Department’s antitrust division, said according to the New York Times. “We will continue to hold companies and individuals who cheat consumers accountable.”
But exactly how these companies are being held accountable isn’t so clear. “StarKist is committed to being a socially responsible company and doing the right thing,” StarKist CEO Andrew Choe said in a statement. “We will continue to conduct our business with the utmost transparency and integrity. While this process is long-term in nature, we have addressed the necessary actions required in this plea agreement, including continuing to strengthen related compliance best practices.”
Choe’s response is vague to say the least, but the plea deal is also still fresh, so maybe it’s too early to see how things will play out. Meanwhile, since Bumble Bee reached its agreement with the DOJ over a year ago, perhaps it could better explain what steps it has taken since.
“The company has taken this matter very seriously and fully cooperated with the DOJ from the start of the investigation,” Jill Irvin, Senior Vice President, General Counsel for Bumble Bee Seafoods, told me via email. “We have established strong guidelines and new internal policies for our path forward, which is being overseen by a chief compliance officer that we hired in 2016. We accepted responsibility for needing to earn back any lost trust in our company and will do so by acting with integrity and transparency in every way we operate our business.”
When pressed to clarify what these “strong guidelines” were, or if the brand had any public documentation of the changes that have been made, Bumble Bee simply declined to comment further.
So how exactly does the Department of Justice investigation help consumers? Christopher Anderson, an Associate Professor of Fisheries Economics at the University of Washington’s School of Aquatic and Fishery Sciences, suggested that the biggest change is simply that by forcing these companies to admit to price fixing and making their collusion public, it provides leverage to the retailers who are purchasing stock from these brands.
“The big buyers—folks like Walmart and Kroger—are pretty savvy, and they are really known for putting the screws to suppliers,” explains Anderson. “And they are going to be the ones that are doing the brass knuckles negotiations with their tuna sales reps, and they’re going to say, ‘You know, we know that prices have been artificially inflated, and we’re going to be looking for lower prices.’”
But Anderson brings up a larger point about tuna price fixing as well: The ramifications aren’t just felt in consumers’ wallets; this issue comes with health and even environmental repercussions too. “One of the costs here isn’t just that we paid too much, but probably people looked at the high price and decided to go buy roast beef and eat that for lunch instead. And roast beef is a lot worse for you than tuna and has a significantly greater environmental footprint,” he tells us. “Tuna—especially canned tuna and pouched tuna, which tends to be skipjack tuna—is a really healthy food. And stocks are healthy so there’s minimal conservation concern.”
An easily forgotten takeaway here is that when a few large companies completely control a market, they can alter our decisions in ways we may not necessarily think about. “Often these things are presented as if eating something is bad, regardless of what it is, but there’s little attention paid to what you would eat instead. Probably most people are not saying, ‘Well, tuna’s not good for me, so I’m going to skip lunch,’” Anderson stresses. “Framing your food decisions in that way is really important.”