Game Changer: not taking sustainability seriously can cause bankruptcy

Blog 6 Tuna Bussiness Fall graphic.png

Now most of you are most probably still lying on a beach somewhere and are not in the least interested in tuna unless it comes in the form of a nice steak on your summer-holiday dinner-table. Meanwhile, back home in the land of the working, fierce tuna wars are reshaping the tuna world as we have known it for the past decades. It might well be that we are witnessing the fall and even destruction of the three big tuna brands _ Bumblebee, Starkist and Chicken of the Sea _ the ‘Big Three’ that once were the uncontested three superpowers in the US tuna market. And as we will see this will have inevitable consequences in making sustainable tuna fisheries something to take more serious while doing business.

Hundreds of clients, most of them retailers, have filed price fixing cases against the ‘Big Three’. These individual claims are now grouped together in class-action law suits and ask for a staggering 2.5-billion-dollar compensation in fines of the tuna brands.  

Why is this important for sustainable tuna fisheries? First of all, we are dealing with the three companies that sell about three quarters of all canned tuna in the US. That is a lot of tuna and a lot of room to improve sustainability. At the core of the accusations of price fixing is the assumption that the Big Three where conspiring together against consumer interests. The plaintiffs argue that aside of price fixing, the companies collectively conspired not to launch a FAD-free tuna product in the US-market. The Fish Aggregating Devices are considered a severe problem in sustainable tuna fisheries.

The plaintiffs argue that aside of price fixing, the companies collectively conspired not to launch a FAD-free tuna product in the US-market

This is awkward for the Big Three, who are important members of the International Seafood Sustainability Foundation (ISSF). ISSF jointly represents a group of the world biggest tuna companies that cover 75 per cent of the global canning industry. ISSF has been advocating sustainable fisheries, but according to critics they are more of an extended lobby group that would like to get a grip on sustainability policies, before sustainability policies get a grip on them. A court ruling not only ruins the credibility of the Big Three’s feeble sustainability policies but also shines a shrill light on the activities of ISSF. Two years ago, ISSF declared that it would require processors and traders participating in its ‘sustainability standards’ to exclusively buy tuna from participating suppliers. Not much was heard about the ruling ever since, and with a court sentence it is highly probable that ISSF will not apply it at all out of precaution for being accused of conspiracy.

In other words: not taking tuna fisheries sustainability seriously and use it for other purposes like closing the market or price conspiracy now comes with a billion-dollar price tag.  The message is clear: companies should compete and not conspire with sustainability. It puts serious limits to private partnership organizations like ISSF as promoters of sustainability.

The message is clear: companies should compete and not conspire with sustainability

Not taking sustainability seriously from now on even can threaten the company’s mere existence. The three US canners have argued that they feel a ‘death knell’ with the ongoing litigations. "Faced with fines they already likely cannot pay and otherwise deteriorating financial conditions, any 'rational defendant' would doubtless 'feel irresistible pressure to settle', rather than risk a bet-the-company trial and potential exposure to $2.5 billion in damages," the canners argued in the class-action lawsuits.  Bumblebee is already considering a bankruptcy under chapter 11, according to Bloomberg earlier this month. The brand, for years under command of the flamboyant, former chair Chris Lischewski, has big problems paying its debts. Owner Lion Capital wants to sells of parts of the company.

On a personal level, this all may end in imprisonment of some of the former head figures in the tuna world. After endless delay, the trial against Bumblebee’s Mr. Lischewski on price fixing charges will start this fall, November 4. Lischewski is big game. Known for his long waving blond hair, he was for years an iconic figure in the tuna industry. As the former chair of the ISSF, he boasted a lot about the efforts to make the tuna fisheries more sustainable.  Mr. Lischewski might face serious jail time.

There is a smell of treason in the air in this drama of tuna-conspiracy. Former executives of the ‘Big Three’ that will witness in this case, will probably accuse Lischewski of being the man with the plan, as part of a deal they made with the prosecution. Among them two of Mr. Lischewski’s former Bumblebee marketing executives, former Starkist vice-president for sales Stephen Hodge and a former sales executive of Chicken of the Sea-owner Thai Union. The last one, John Sawyer, has already entered in a non-prosecution agreement after Chicken of the Sea worked with the authorities as the whistleblower in the case.

Is this a dagger I see before me? Shakespearean tuna drama indeed.