In 1961, the tuna processor StarKist created a cartoon character for its ads, a hip, beret-wearing, bespectacled fish who thought he was a perfect fit for the company’s cans but was consistently rejected with a note lowered into the ocean on a hook saying, “Sorry Charlie!” Now it’s StarKist that’s on the hook.
On Sept. 11, federal judge Edward Chen of California’s Northern District fined StarKist the statutory maximum of $100 million for its role in a price fixing conspiracy. As part of a negotiated guilty plea to the felony antitrust charge, StarKist admitted its involvement in a nearly two-year scheme with Bumble Bee Foods and Chicken of the Sea to inflate prices.
A condition of the deal, according to the Justice Department’s statement on the matter, is that the company will cooperate in further investigations. “Today’s result demonstrates our commitment to enforcing the antitrust laws aggressively against companies that fix prices,” said assistant attorney general Makan Delrahim. “Hard-working Americans deserve the benefits of open competition when they spend their hard-earned money on items that stock kitchen shelves. When a corporation cheats customers at the checkout line, the Antitrust Division will hold it accountable to the greatest extent.”
StarKist was placed on 13 months probation and ordered to make the first payment of $5 million within 30 days, followed by $11 million in 2020. From 2021 on, it will owe $21 million each year for four years. StarKist attorneys argued previously that the company could not afford the statutory maximum in light of other suits they face and likely civil penalties that will arise, asking to pay only $50 million. But at sentencing the San Francisco District Court judge appeared unmoved by the pleas for leniency, saying his review of the assets showed the company could make the penalty payments.
Along with competitor fish processors Bumble Bee Foods and Chicken of the Sea, StarKist representatives between 2011 and 2013 discussed keeping prices high and raising consumer costs as demand for canned tuna was falling. The scheme came to light when Chicken of the Sea’s attempt to buy Bumble Bee failed in 2015. Chicken of the Sea acted as a whistleblower, alerting federal regulators to the conspiracy—its witnesses told federal prosecutors that StarKist, with the largest market share, was essential to the success of the illegal scheme. Bumble Bee pleaded guilty to an antitrust charge in 2017 and was fined $25 million. All three companies still face civil lawsuits, too.
So far, the ongoing federal antitrust investigation into the packaged-seafood industry by the Justice Department and FBI in San Francisco has yielded six charges. “The consequences for greedy companies who cheat the marketplace and American consumers are significant and clear,” FBI San Francisco special agent in charge John Bennet said in a statement. “The FBI, along with our law enforcement colleagues, will continue to pursue those who conspire to fix prices and bring them to justice.”
In other words, “Sorry Charlie!”