In a rare outcome, former Bumble Bee CEO will be sent to prison for price-fixing
(AP Photo/Nick Ut)
(AP Photo/Nick Ut)
The sentence is the latest in a surge of price-fixing investigations in the food industry.
The former chief executive officer and president of Bumble Bee Foods, LLC, one of the world’s largest producers of canned tuna and other seafood products, has been sentenced to 40 months in jail for his leadership role in a three-year antitrust conspiracy to fix the prices of canned tuna. Christopher Lischewski’s sentence, which also includes a $100,000 criminal fine, comes after a San Francisco jury found him guilty in December of helping to orchestrate the scheme, which also involved the StarKist and Chicken of the Sea companies.
“The conduct was deliberate, it was planned, it was sustained, over a three-year period,” said Judge Edward M. Chen, according to reporting from Seafood Source. “This was not a rash act of having to commit a crime under distress, under episodic circumstances as we see sometimes, this was a contemplated and deliberate plan.”
Moreover, he said, the scheme targeted poor people.
“The product in question is a basic food staple,” Chen said. “It is not expensive LCD screens, it is not some part of high price consumer goods … This is food … for people who I think it’s fair to assume includes those who are at the lower end of the socioeconomic scale based on the pricing of this product.”
It’s rare that chief executives of food companies do time for any egregious conduct.
Lischewski’s legal troubles began in 2016, when wholesalers, retailers, and distributors, including Walmart and Kroger, began to sue Bumble Bee, alleging that the company conspired with Starkist and Chicken of the Sea to reduce the weight of tuna in cans from six to five ounces, while at the same time raising prices. The company settled with more than 30 of those companies out of court.
In 2017, the federal government sued Bumble Bee. The company pled guilty to a felony charge and was fined $25 million; in a somewhat rare move, the Justice Department held a C-suite executive responsible for his company’s violation of public trust, and indicted Lischewski, then a former executive, for his alleged role. Last year, as he was on trial in federal court in San Francisco, Bumble Bee filed for bankruptcy, and agreed to sell its assets to Taiwan-based Fong Chun Formosa Fishery Company for approximately $925 million.
The case is noteworthy because of its scale. Manish Kumar, an attorney representing the Department of Justice, said Lischewski was part of “one of the largest and most pernicious price-fixing conspiracies ever prosecuted,” having “essentially infected an entire industry selling goods in the U.S.”
And also because Lischewski will be one of the few executives to serve actual time for price fixing.
Perhaps the best-known case involves the former chairman of the auction house Sotheby’s, who served a year and a day in prison for collaborating with Christie’s to cheat customers out of $100 million, Bloomberg Law reports. Michael Andreas, a former vice chairman of Archer Daniels Midland, the global grain trader, was sentenced to three years in prison in 1998, for meddling in the prices of lysine, an animal feed additive.
Lischewski was part of “one of the largest and most pernicious price-fixing conspiracies ever prosecuted.”
It’s also rare that chief executives of food companies do time for any egregious conduct.
A rare exception is Stewart Parnell, former chief executive of the Peanut Corporation of America, who is currently in prison for his company’s role in a salmonella outbreak in peanut butter that killed at least nine and sickened thousands in 2008 and 2009.
Lischewski’s sentence is the latest development in a surge of price-fixing investigations in the food industry.
This month, a federal grand jury indicted the chief executive of Pilgrim’s Pride Corporation, Jayson Penn, and three other current and former poultry industry executives on antitrust charges for their role in a conspiracy to fix prices on broiler chickens. Tyson Foods is cooperating in the investigation.
Experts say those indictments are a sign of more antitrust action to come. The Justice Department has also subpoenaed the country’s four largest meatpackers, amid concerns that they’re squeezing ranchers during the pandemic by conspiring to lower prices for their cattle.
Lischewski was facing a maximum penalty of 10 years in prison and a $1 million-dollar fine for his role in the conspiracy. Chen reduced Lischewski’s sentence, which is set for six to eight years, due to the Covid-19 crisis.
His attorney plans to file an appeal, Seafood Source reports.