Price Fixing Lawsuit Targets Norwegian Salmon Aquaculture Sector

In February, news broke that the European Union Commission’s Competition Authority had carried out unannounced inspections at the premises of several European aquaculture companies, including facilities owned by Norwegian companies Mowi, Grieg Seafood, and SalMar and Lerøy Seafood (as joint owners). Soon after, the Commission announced that the inspections were part of an investigation focused on accusations of anti-competitive cooperation in the Norwegian Atlantic salmon aquaculture sector. According to a press release, the Commission specifically suspects that the aquaculture companies in question may have violated EU antitrust rules by coordinating prices in order to sustain and possibly increase the prices of farmed Norwegian Atlantic salmon. Depending on the outcome of the European Union Commission’s antitrust investigation, the companies in question could be subject to fines constituting up to 10% of their global turnover.

The Commission’s investigation has caused waves throughout the global aquaculture industry, including here in the United States, where a class action antitrust lawsuit was recently filed against the previously mentioned Norwegian companies as well as others. Briefly, antitrust laws help to ensure fair competition between businesses by prohibiting such things as price fixing—a practice wherein competitors voluntarily agree to raise, lower, or stabilize retail prices or competitive terms. Such unscrupulous practices put consumers at a disadvantage by subverting economic principles such as supply and demand in order to benefit businesses. In the United States, three core federal laws relate to antitrust—the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. Additionally, most states have enacted antitrust laws that are enforced by state attorneys general or private plaintiffs.

The class action lawsuit at issue was filed by Euclid Fish Company on behalf of itself and other class members in the Southern District of Florida in April. The complaint alleges that multiple members of Norway’s salmon aquaculture sector exchanged competitively sensitive information amongst themselves with the aim of artificially controlling the price of farm-raised salmon bought by the plaintiffs in violation of the Sherman Act. The Sherman Act outlaws every unreasonable contract, combination, or conspiracy in restraint of trade as well as any monopolization, attempted monopolization or conspiracy or combination to monopolize. Specifically, the lawsuit contends that, as early as July 2015, the defendants participated in meetings and conversations amongst themselves during which they agreed to charge prices at certain levels for farm-raised salmon and products sold in the United States and elsewhere. According to the plaintiffs, the pricing fixing conspiracy affected hundreds of millions of U.S. dollars’ worth of salmon in total.

Key to the plaintiffs’ allegations is the Norwegian companies’ alleged manipulation of the “spot market” for Atlantic salmon in Oslo. In contrast to a “futures market,” where delivery of sold products is executed at a later date, goods sold in a spot market are traded for immediate delivery. While only 1% of Norway’s farmed salmon yield is sold on the spot market, with much of the remainder sold via annual contracts, the spot prices set the baseline for long-term contract prices. According to the lawsuit, the Norwegian companies have allegedly been manipulating the spot market since 2015 by using subsidiary companies to drive up the spot price. By using their subsidiary companies to purchase large quantities of fish when the spot price has fallen, the companies allegedly increased the price of farmed salmon in Norway at a higher rate than the cost of producing it while simultaneously inflating company sales earnings substantially. According to the lawsuit, such price increases harmed the class action plaintiffs who were forced to pay more for farm-raised salmon than they otherwise would have in the absence of collusion.

In response to the lawsuit, all defendants have denied wrongdoing, calling any accusations of price fixing or other anti-competitive conduct “unfounded.” Since the filing of the initial complaint, several more seafood purchasers have joined the lawsuit, including wholesalers and restaurants. A separate lawsuit filed by Schneider’s Fish and Sea Food Corp. in the same court also challenging the Norwegian companies’ alleged spot price fixing was consolidated in May. If the class action plaintiffs are successful in their claims, the Norwegian defendants could be held responsible for monetary damages as determined by a jury.