EU pleads with US judge to limit discovery in salmon price-fixing class-action lawsuit

The European Commission's headquarters in Brussels, Belgium.

The European Union has not issued any public comment regarding its antitrust investigation into Norwegian salmon farmers for more than a year, but on 13 July, it made clear its inquiry is still active.

In a brief filed in the U.S. District Court in the Southern District of Florida, the European Commission contended that a class-action suit filed on behalf of U.S. purchasers of Norwegian farmed salmon in 2019 is interfering with its investigation. The lawsuit accuses Mowi, SalMar, Lerøy Seafood, Grieg Seafood, and Cermaq Group of exchanging competitively sensitive information among themselves, with the aim of artificially controlling the price of farm-raised salmon sold in the United States.

“The Commission seeks to prevent the discovery of investigatory materials whose continued nondisclosure is critical to the ability of the European Union as a sovereign to investigate and deter unlawful cartel activities,” the European Commission said in its brief.

The E.C. confirmed its antitrust investigation in 2019, soon after conducting unannounced inspections on Tuesday, 19 February at the premises of several companies involved in the farmed Atlantic salmon sector in Europe. Since then, it has not issued any public statements related to the issue, and has declined numerous inquiries from SeafoodSource to obtain more information on the status of its investigation.

In March 2021, District Court Judge Cecilia Altonaga issued a ruling allowing the class-action lawsuit against the Norwegian producers to proceed. But in its amicus curaie filing, the European Commission warned Altonaga that allowing the plaintiffs in the case to seek out information such as corporate documents and data from the defendants could undermine its investigation.

“Disclosure of information submitted on a voluntary basis during our investigations can seriously undermine the effectiveness of the European Commission’s and other authorities’ antitrust enforcement actions,” it wrote.

The E.C. asked Altonaga to decline to compel the discovery of material that is exempted from disclosure under E.U. law.

The E.C. said it “is not supporting any of the parties to this action,” but seeks to prevent the discovery “of certain investigatory materials whose continued nondisclosure is critical to the E.U.’s ability as a sovereign to investigate and deter unlawful cartel activities.”

The E.C. suggested allowing discovery in the case could potentially expose participants in the European Union’s Leniency Program, which functions similarly to the U.S. Department of Justice’s Amnesty Program, allowing participants to confess wrongdoing and provide corroborating evidence in exchange for prosecutorial leniency. The lawsuit’s discovery process could also uncover a settlement agreement between the E.C. and one or more of the defendants, it said.

In fact, plaintiffs have already obtained several documents relating to the E.C.’s ongoing investigation, “including pre-existing documents, such as business records that existed independently from the Commission’s investigation,” according to the brief. Continued disclosure of sensitive documents could undermine the E.U.’s authority to conducts investigations within its own borders, the E.C. said in its brief.

“It could undermine the Commission’s enforcement strategy by making accessible highly sensitive information that could reveal, e.g., the investigation’s next steps, the theory of harm pursued by the Commission, or entities that are not yet – but could in the future – become subject to the proceedings. Likewise, disclosure of replies to Commission requests for information would tend to reveal the Commission’s investigative strategy by indicating which questions the Commission asked in the course of its investigation, which documents it requested, and which documents are contained in the Commission’s file while the Commission’s investigation is ongoing,” it said.

Specifically, the plaintiffs in the U.S. class-action suit have requested “draft and final responses provided to the European Commission’s questionnaires sent to participants in the salmon industry.” Providing the answers provided by the salmon companies to E.C. investigators could undermine both the commission’s authority in this case, and more broadly, damage the ability of U.S. and E.U. law enforcement officials to conduct investigations that cross international boundaries, the E.C. contended.

“Destroying the nondisclosure promise after the fact creates an unfair and unexpected harm to companies who cooperated with or otherwise provided information to the Commission, reduces confidence in the Commission’s sovereign promises, and, in turn, makes it more difficult for the Commission to secure future cooperation and to obtain information from parties suspected of engaging in anticompetitive acts. Such a result could have a corresponding negative impact on the U.S. Department of Justice Antitrust Division’s amnesty program and its international anti-cartel enforcement program,” it said. “In short, the guarantee of nondisclosure lies at the heart of the Commission’s ability to detect and punish unlawful cartels, and anything that damages that guarantee undermines the E.U.’s sovereign interest in preventing and punishing cartels and risks serious economic harm to consumers in the EU. In light of the global nature of much cartel activity, impeding the Commission’s ability to combat unlawful cartels would likely have negative effects on consumers in other places – including the United States.”

The E.C. limited its request of withholding of information to so-called “black-listed” documents, pertaining to leniency statements and settlement submissions, and “grey-listed” documents, which include   information that was prepared by a natural or legal person specifically for the proceedings of a competition authority; information that the competition authority has drawn up and sent to the parties in the course of its proceedings; and settlement submissions that have been withdrawn.

“EU law ensures unequivocal nondisclosure of ‘black-listed’ evidence permanently and ‘grey-listed’ evidence until the competition authority closes its investigation,” the E.C. wrote. “Judicial orders countermanding the nondisclosure binding under E.U. law necessarily call into question the validity of public acts by a sovereign authority within its own borders. That is, this court cannot compel the discovery of documents that are protected under E.U. law without simultaneously declaring invalid and ineffective the official acts of a foreign sovereign – in the context of the applicable E.U. directives and regulations whose legal quality is akin to statutes in the U.S. – which extended the nondisclosure status to the evidence. Accordingly, the court should not authorize the discovery of documents or information that cannot be disclosed under E.U. law.”

Altonaga is set to hear more arguments pertaining to the request on Thursday, 29 July. Any delay in discovery – as occurred in the class-action lawsuits filed in the recent canned tuna price-fixing case against StarKist and Bumble Bee Foods (evidence of which was revealed through Chicken of the Sea’s participation in the U.S. Justice Department’s amnesty program) could benefit the plaintiffs by allowing the E.C. to press one or more of the accused companies into providing evidence of wrongdoing.

Michael Lehmann, a partner with San Francisco, California, U.S.A.-based Hausfeld LLP, previously told SeafoodSource the E.U.’s initial announcement of its inquiry in February 2019 was an impetus in the filing of his clients’ complaint, and that any findings from the investigation will likely play a major role in how the case is decided.

However, in March 2021, Lehmann and Peter Prieto, a partner with Miami-based Podhurst Orseck, who is also representing some plaintiffs in the class-action suit, said as the case has proceeded, it can now stand on its own merits.

In a response to the E.C.'s brief filed with the court on 14 July, the plaintiffs argued the E.C. did not give them proper notice of their intent to intervene in the lawsuit, and said it opposed a limitation of its discovery process.

"There are better ways to address the EC’s concerns without prohibiting the production of the documents at all, which is directly contrary to the goals of the antitrust laws in this country," they wrote. "Plaintiffs and the E.C. can likely address some of these concerns through a meet-and-confer process, which has not yet been conducted."

Photo courtesy of IDN/Shutterstock


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