BioMar, Skretting, Salmo Food accused of fixing price of aquafood in Chile, based off Cargill whistleblower complaint
Chile’s National Economic Prosecutor's Office (FNE) has accused four salmon aquafeed producers of colluding to fix prices between 2003 and 2015.
According to a summons presented by FNE to the Chile’s antitrust court, the Tribunal de Defensa de Libre Competencia, BioMar Chile SA (BioMar), Comercializadora Nutreco Chile Limitada (Skretting), EWOS Chile Alimentos Limitada (EWOS), and Vitapro Chile SA (Salmo Food) actively worked together to maintain an agreement to fix their sale prices of fishmeal and fish oil over the 12-year period.
The FNE has requested the antritust court fine BioMar, Skretting, and Salmofood the maximum penalty of around USD 70 million (EUR 63.3 million) total for their transgression, or around CLP 17.86 billion (USD 23.8 million, EUR 21.3 million) for each one.
. It exempted EWOS in its request for punishment, saying the company was the first to bring forward evidence of the price-fixing scheme. EWOS is owned by Minnetonka, Minnesota, U.S.A.-based feed giant Cargill.
"In this case, our investigation had as a starting point the confession of one of the members of the cartel, which only confirms the essential role that compensated complaints play in the detection and prosecution of collusion," FNE Prosecutor Ricardo Riesco said in a statement.
EWOS approached the FNE to inform it of the existence of the price-fixing agreement in 2016, soon after it was acquired by Cargill in October 2015.
“Shortly after the closing of the acquisition of EWOS from Altor and Bain Capital in October 2015, our EWOS employees in Chile informed us about practices in the salmon feed industry in Chile that were inconsistent with the Cargill Competition Policy and possibly violated the Chilean competition law. We immediately initiated an investigation, self-reported to the FNE in January 2016, and ceased participating in the problematic conduct,” Cargill said.
The scheme was limited only to Chile, and included contacts with competitors that contravened Cargill’s competition policy and code of conduct. Cargill ceased all questionable activity immediately after its discovery, a Cargill spokesperson told SeafoodSource.
"We have fully cooperated with the FNE and one of the requirements of our cooperation has been complete confidentiality around the process,” Cargill said in a statement sent to SeafoodSource. “Conducting business in an ethical manner is foundational to how we operate in Cargill.”
After being contacted by Cargill, the FNE initiated its own investigation, which was strengthened significantly by raids and data seizures conducted at the companies’ corporate offices in Chile, which resulted in the discovery of emails and other statements by company representatives and executives, many of whom are cited as evidence in the FNE presentment.
The alleged conspiracy was coordinated through emails, meetings, and phone calls between executives and sales staff of the four companies, who exchanged pricing information both for raw materials and their finished products, as well as their production and supply volumes. There is evidence that those involved made attempts to eliminate traces of their contacts and supposed illegal behavior, FNE said.
While no individuals will be prosecuted on criminal charges, as collusion was not a criminal offense in Chile when the alleged price-fixing took place, the FNE said it is seeking a maximum financial penalty due to the fact that the four companies involved in the conspiracy collectively consist of virtually the entire market suppliers for salmon feed in Chile, and because aquafeed represents a significant part of the cost of producing salmon – estimated by the FNE to be around 50 percent.
“Their customers had to pay the cartel prices because they did not have alternative offers,” it said.
All four companies FNE alleges were involved in price-fixing are based outside of Chile. Besides the U.S.-based Cargill, BioMar is owned by the Brande, Denmark-headquartered Schouw & Co.; Skretting is owned by Nutreco, which is based in Amersfoort, the Netherlands; and Salmo Food is owned by Lima, Peru-based Alicorp.
In a statement, BioMar acknowledged its offices in Chile were subject to unannounced inspections and that FNE has indicted the company “on charges of concerted practice, claiming that the company be fined up to USD 24 million [EUR 21.7 million].”
“BioMar Chile has been cooperative, responding to questions and providing the documentation requested to the extent possible,” BioMar’s parent company, Schouw & Co., said. “Further to the industry investigation, the FNE has now indicted BioMar Chile. The charges are based on isolated circumstances related to the Chilean fish feed industry in the period 2003-2015.”
The company said it would fight the charges brought by the FNE.
“BioMar Chile does not acknowledge the charges brought by the FNE, and the company intends to rebut the charges that it has participated in concerted practices so as to restrict competition in the industry,” it said. “Presumably, this will be a rather long-running case, but we will keep the market informed of any material developments in the matter.”
In a statement emailed to SeafoodSource, Skretting said it was still reviewing the indictment.
"We only became aware through press publications yesterday of the allegations made by the FNE (Competition Authority)," the company said. "We take competition compliance extremely seriously. We will carefully review the complaint and present our case in due course."
Salmo Food did not immediately respond to a request for comment from SeafoodSource.