Federal prosecutors in the US are doggedly going after some of the world’s biggest tuna companies in an attempt to nail them for colluding to stifle competition in the canned fish market.
Last week, the president of Bumble Bee Foods was indicted by a federal grand jury over the issue—the fourth person to be charged in the overall investigation. Last year, a former executive at StarKist was also charged. Such high-profile indictments are making waves in the tuna market, which is dominated by three companies: Chicken of the Sea, StarKist, and Bumble Bee Foods.
At the heart of the issue is price fixing, which is when companies collude to set a uniform price for their goods, rather than compete on the free market. In the US, price fixing is a federal antitrust crime. The US Federal Trade Commission lays out why very plainly: “When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors.”
But the canned tuna business has fallen on tough times, and the companies selling the stuff may have gotten desperate.
Two decades ago, tuna accounted for 74% of the canned fish sold in the US. Today it’s down to about 59%.
Per capita consumption of canned fish is on the decline in general in the US. It peaked in the late 1980s at just over five pounds per person, but between 1985 and 2015 that number tumbled by 26%. The calculation includes salmon, sardines, shellfish, and various other species. But among them all, tuna was hit hardest with a 33% decline in that same period.
Much of that decline has been attributed to health concerns (paywall) over mercury that spread among consumers in the 1980s. Those concerns began in 1970, when a Food and Drug Administration test of canned tuna showed unsafe levels of mercury in the product, leading to a massive recall of nearly 1 million cans. The headlines scared a lot of people from eating canned tuna. Then, in the 1990s, the tuna industry faced more criticism because its role in dolphin deaths. Because dolphins often swim in the same waters as yellowfin tuna, they were becoming snagged and killed in fishing nets. Knowledge of this led to some boycotts of the industry.
Facing the overall decline in tuna consumption, finding stability in the market might be one reason the industry may have turned to price fixing. Another reason is that there’s not a hell of a lot of innovation happening in the world of canned fish. In 1978, the Harvard Business Review investigated price fixing and why companies might take the gamble of engaging in the illegal practice. As part of that investigation, the CEO of a paper parcel company explained: “Our bags and boxes aren’t really any better or worse than those of our competitors. You don’t really go out and sell the product. Salespeople don’t have any special product to sell. The only way to get a buyer is to sell at a lower price. Thus competitors may think that the only way to make it is to get together and fix prices.”
It’s not all bad news for tuna companies, though. Overall, the United Nations Food and Agriculture Organization has noted that tuna consumption around the world is on the rise, spurred mostly by the emergence of sushi as a global dietary trend. That positions a company such as Bumble Bee Foods—which in 2014 acquired Anova Food, a leading sushi provider—pretty well, despite the lackluster performance of canned fish.