Lawsuit challenging Pacific Seafood’s acquisition of Ocean Gold dismissed
A U.S. District Judge has dismissed a lawsuit claiming that Pacific Seafood’s purchase of Ocean Gold Seafoods would lessen competition in West Coast seafood markets.
Fishermen Jeff Boardman, Dennis Rankin, Lloyd D. Whaley, and MV Fisheries filed suit against Pacific Seafood in January 2015 after Pacific Seafood announced its intention to pursue the acquisition of Ocean Gold. Pacific, headquartered in Clackamas, Oregon, is one of North America’s largest seafood suppliers, while Ocean Gold is a a processor of Pacific whiting, Dungeness crab, pink shrimp, sardines, and tuna based in Westport, Washington.
The plaintiffs sued citing violations of the Clayton Antitrust Act, asserting that Pacific Seafood’s proposed acquisition of Ocean Gold would cause a “substantial lessening of competition and the enhancement of an existing monopoly held by Pacific Seafood Group in the West Coast seafood input markets for trawl-caught groundfish, Pacific onshore whiting and Pacific coldwater shrimp.”
However, U.S. District Judge Michael McShane ruled that since none of the plaintiffs was active in the Westport market, none had standing to sue.
“Pacific Seafood argues that plaintiffs lack antitrust standing to bring this action because they do not participate in the relevant geographic market, and because plaintiffs do not sell to Pacific Seafood or Ocean Gold. I agree.” McShane wrote in his 15 May ruling.
In a statement to SeafoodSource, Pacific Seafood spokesperson Dan Occhipinti said the company was satisfied with the judgment.
“We’re of course pleased with the result and looking forward to getting back to what we do best: Partnering with over 800 independently-owned vessels to provide high quality seafood products to families all over the world.” Occhipinti said.
Pacific Seafood currently owns about a third of Ocean Gold. Francis Miller, Sherry Miller, Jacquelyn Rydman, and Mark Rydman, who collectively own about 48 percent of Ocean Gold, intervened as defendants. Pacific called off its plans to acquire a majority share of Ocean Gold in 2015, soon after multiple lawsuits were filed challenging the move.
In 2016, Ocean Gold purchased 72,570,000 pounds of whiting, 730,000 pounds of trawl-caught groundfish, and 45,000 pounds of shrimp. Pacific Seafood’s Westport facility purchases the vast majority of coldwater shrimp sold in Westport, while Ocean Gold processes most of the shrimp purchased by Pacific Seafood, and purchases nearly all of the whiting and most of the groundfish delivered to Westport.
Boardman, Whaley, and Rankin argued that Pacific Seafood’s acquisition of Ocean Gold would cause them financial injury “by creating a monopsony that enables Pacific Seafood to suppress ex-vessel prices it pays its own suppliers, and, in turn, compel other processors to follow suit.”
However Boardman and Whaley, who harvest only shrimp, and Rankin, who harvests groundfish, do not operate in Westport and none of the plaintiffs has delivered any of their catch to Pacific Seafood since 2012, the court found.
“These plaintiffs are not the proper parties to challenge the proposed merger. There is no evidence to support that they participate in the Westport market,” McShane wrote. “More than 800 individual fishing vessels deliver seafood to Pacific Seafood at its facilities along the West Coast, but none of those fishing vessels or their owners are plaintiffs here. None of the fishing vessels or owners that deliver to Westport have joined this action.”
McShane did not address whether he believed whether Pacific’s proposed takeover of Ocean Gold might create an unfair market in Westport or the larger seafood marketplace on the U.S. West Coast.
“However well-intentioned plaintiffs are in trying to protect the fishing industry from Pacific Seafood’s allegedly anti-competitive conduct, to bring an antitrust action, plaintiffs still must show that they will suffer an antitrust injury,” McShane wrote. “The record here shows that plaintiffs do not participate in the Westport market and are not likely to do so in the future. A plaintiff cannot show an antitrust injury if the plaintiff does not participate in the market where the allegedly anticompetitive merger would occur.”