Reston, Virginia, U.S.A.-based Starkist has had its request to exclude its private-label sales from a lawsuit filed by customers alleging price-fixing denied.
A 25 July decision from Dana M. Sabraw, the chief justice of the U.S. District Court for the Southern District of California, denied Starkist’s request to separate its private-label sales of canned tuna from a class-action lawsuit brought against it by its customers, alleging it fixed the prices of canned tuna between 2011 and 2015.
Starkist argued no evidence existed it engaged in price-fixing of its private-label tuna, and moreover, that such illegal activity would be very difficult to accomplish, since the market has more competition than the so-called “Big Three” tuna players in the branded tuna sector – Chicken of the Sea, Bumble Bee, and Starkist, which together control 85 percent of that market.
“The supply side of private label is also far less concentrated. As a result, private label prices are almost entirely a function of current and projected costs,” Starkist wrote in its motion. “Suppliers in the private label segment, most of which do not supply branded tuna, would swiftly undercut any other approach to pricing.”
Starkist said none of the big three include private-label products or prices on their national price lists or promotional guidance, and that its private-label sales, which included Walmart’s Great Value, Target’s Market Pantry, and Costco’s Kirkland labels, amounted to around 13 percent of its total sales.
“For their private-label products, there is simply the price, which is individually negotiated (often via bids) and varies by customer,” it wrote.
However, Sabraw ruled in favor of the plaintiffs, which include supermarket chains Winn-Dixie and Bi-Lo, Associated Wholesale Grocers, Affiliated Foods Midwest Cooperative, and Kroger, finding private-label and branded tuna are both connected to the cost of raw fish.
“Ultimately, the end product, i.e., canned tuna, is the same, regardless of whether it is marketed as a branded product or with a private label,” Sawbraw wrote. “Defendants have failed to show that there are two distinct and separate markets for branded and private-label tuna.”
Starkist’s fruitless effort to remove its private-label sales from consideration in the case would likely have reduced any potential penalty it is ordered to pay to plaintiffs.
In September 2019, the company was ordered to pay USD 100 million (EUR 90.3 million at that time) after it pleaded guilty to one criminal charge of price-fixing.
Photo courtesy of RozenskiP/Shutterstock
