The Chilean National Economic Prosecutor's Office (FNE) has accused seven companies that process king crab in the Magallanes region, as well as eight of their executives, for having colluded on prices between 2012 and 2021.
The FNE charged the accused of setting prices at which they bought king crab from artisanal fishermen and has now asked Chile’s Court for the Defense of Free Competition (TDLC) to levy fines for an equivalent of around CLP 51.9 billion (USD 54.7 million, EUR 46.3 million) against the companies involved and another CLP 424 million (USD 447,000, EUR 378,000) against the executives responsible.
According to the FNE accusation, representatives of the companies Elaboradora de Alimentos Porvenir, International Seafood, Pesquera Cabo Froward, Productos Marinos Puerto Williams, Proyecta Corp, Sociedad Pesquera Bahía Chilota, and Bakkavör would meet and/or resort to phone calls, emails, and WhatsApp messages to exchange strategic information on the prices they paid or would pay for the purchase of king crab at the beginning of the season. They allegedly also schemed to delay price increases that would normally occur with the advance of the extractive period that runs from July to November in Chile.
Between 2017 and 2021, the companies involved reportedly acquired between 81 percent and 88 percent of all the live king crab caught in the country. They would then process and export the crustacean mainly to China, the U.S., and Mexico.
“In their communications, the accused companies corroborated how much their competitors were effectively paying, for example … or what their strategy would be in future purchases, thus neutralizing the independence in decision-making and the uncertainty in rivals’ behavior, which should exist in a competitive environment,” the FNE accusation says.
The investigation asserts that this practice caused harm to the artisanal fishermen of the Magallanes region who extract this resource, as they received lower payments compared to what they should have received in a competitive market.
The FNE's investigations began in July 2020 after having first received a complaint.
In February 2021, Bakkavör resorted to a whistleblower scheme – whereby those involved in a crime can be exempt from prosecution – and three of its executives confessed to their participation in the collusion and provided testimony on the collusion of the other companies involved. As such, Bakkavör and its representatives were not included in FNE’s solicited fine.
Investigators then tapped involved executives’ telephones and performed raids and seizures at companies.
“With this case, the Prosecutor's Office reaffirms its commitment to take action in any corner of the country where there is an anticompetitive infraction and to prosecute collusion with the utmost rigor,” National Economic Prosecutor Jorge Grunberg said in a statement. “While almost all the king crab extracted is exported, the damage that this behavior has caused in the Chilean market is indisputable, particularly to artisanal fishermen who live from the extraction of this resource.”
Chile’s Undersecretary of Fishing, Julio Salas, estimated that some 2,000 families had been affected by the scheme.
