‘No one is above the law’, the prosecutor argued. So just last week the jury of the US Court for the Northern District of California found the former CEO of Bumble Bee, Mr. Chris Lischewski, guilty on the felony charge of price-fixing. Next April the judge might sentence Mr. Lischewski to a penalty up to 10 years prison and a fine of 10 million dollars.
The case shocked the tuna industry. Bumble Bee is one of the lead firms in the tuna world. For years Mr. Lischewski reigned as a tsar in the global tuna community. His fingerprints are all over the International Seafood Sustainability Foundation (ISSF), the industry lobby club on sustainability he helped to found.
It is not just a weird coincidence that Tuna Wars s is published, while the case on price-conspiracy against the three iconic tuna canning brands _ Bumble Bee, Starkist and Chicken of the Sea _ is in court. The Big Three, as they are known, have been involved in several Tuna Wars in the past decades. They like to work together. Read the book. They used to join in allied forces if it was convenient to confront their common commercial enemies. Their strategies were controversial from the start. In the end, is was just a matter of time that together they stood trial.
This court case on price-conspiracy is, if anything, a big Tuna War.
This court case on price-conspiracy is. if anything, a big Tuna War
What is it about? The three big US brands have been fixing the price of canned tuna from 2010 until end of 2013. Price-fixing is prohibited and considered a criminal offence in the US. Several retailers filed complaints after they got the impression they were being cheated on the price of tuna. The case hit the tuna-world as an earthquake. Multi-million dollar claims of retailers can shipwreck the companies. Bumble Bee is actually practically bankrupt and for sale. Those responsible for the price-fixing can be convicted to substantial jailtime.
As said, the conspiracy in this trial is about the price, but it has a strong link with sustainability. The Big Three used to meet each other a lot. For instance, in regular meetings of the ISSF, the organization the three of them jointly founded. Mr. Chris Lischewski was for years the chair of ISSF. Last year, ISSF issued a ‘conservation measure’ (2.4), which states that its members (according to the ISSF 75 % of the global market of canned tuna) should purchase tuna primarily from other traders and processors that are ISSF participating companies. Everybody knew Chris Lischewski, a colorful character with his long platinum blond waving hair and rather strong presence. And Chris knew everybody. The witness list of the trial reads like an invitation to a Bangkok tuna gala for the international tuna jet set.
But in fact, it is an invitation to a battlefield.
The Witness list of the trial reads like the invitation to a Bangkok tuna gala
The tuna war moved in court, including evidence that showed war-like language in the e-mail traffic between Mr. Lischewski and two of his subordinates at Bumble Bee _ who, by the way, pleaded guilty. Aggressive price cuts were described as ‘attacks’, according to a reporter of the online magazine Undercurrent News. The executives on other moments ‘would wave the white flag’ and agree to a ‘truce’ or a ‘peace’.
Prosecutor Leslie Wulff showed no surprise that Mr. Lischewski was using the war idiom, she told the jury. As a part-owner of Bumble Bee, he could have received a ‘big payout’ (that is: tens of millions of dollars) if Bumble Bees ambitious earning targets were met. These ‘payouts’ are the way the British private equity fund Lion Capital, owner of Bumble Bee since 2010, reward their executives. It is part of the standard practice of these investment companies: buying a company, doing some magical clean up stuff (usually: squeezing the costs out of it so the figures in the books look nice), selling it and cashing in the profit. Not seldom, this is an incentive for questionable practices.
Squeezing the costs proved not to be an easy job in a tuna market where the price of raw material and wholesale was bringing the margins further down, and the competition between the canners fierce. ‘So, the defendant took matters into his own hands. He ended the price war and entered a truce with his competitors’, Mrs. Wulff was quoted in Undercurrent News. Now the consumers payed the price.
Mr. Lischewski lawyer took an opposite view: the war language just showed an aggressive competition. War. Enemies. On the other hand, Mr. Lischewski just refrained from aggressively lowering Bumble Bees prices against Starkist, according to the defense. ‘These people in this industry use the language of war’, the lawyer is quoted in Undercurrent. Indeed, they did.
Tuna war alliances have a long history with the Big Three.
Maybe using the war language is just a bad habit. The fact of the matter is that tuna war alliances have a long history with the Big Three tuna canners that dominate the American market. Just take the three ‘Flipper Wars’ that figure in the book Tuna Wars. In these wars it was all about working together against common enemies. Together the three canners used (and helped to create) the Dolphin Safe certificate as a way of lifting a sustainable façade for their tuna fishery practices. Then they used the very same label to close their US market for the Mexican competitors. And finally, the Dolphin Safe label worked out fine to keep other, more reliable certified tuna like the MSC certified PNA free school skipjack, at a comfortable distance. Here too, the consumer payed the price, this time by buying tuna that in many cases is much less sustainable than it appeared to be.
The price-fixing case is just one of the battles in the tuna wars where the Big Three coalition was involved
So, the price-fixing case is just one of the battles in a range of tuna wars since the nineties where the Big Three coalition was involved. It confronts us with some dilemmas on our path to the supply of more sustainable tuna. Market-driven environmental governance is impossible without cooperation with or partnerships within the private sector.
But in a market where relatively few companies are dominating the scene, and in particular where price-fighting and small margins are key characteristics, lead firms will be tempted to conspire against the public in order to safeguard their market-shares and profits. And sustainability claims might convert into just another marketing tool to reach for these goals. In the end, both the consumer and the tuna will pay the price for it.
That has to be prevented. In the case of price-fixing the American laws are pretty tough. Angry consumers now started a parallel case against the Big Three for misguiding their buyers with the ‘Dolphin Safe’ label. Together with the price-fixing case, this case might be a good starting point for setting a standard against ‘sustainability-fixing’: conspiring in abusing sustainability claims against consumer and environmental interests in order to safeguard market-shares and profits.
It might prevent many future Tuna Wars.