Chilean government officials call for harsh punishment if fishmeal price-fixing collusion charges proven
The responses of market actors and officials to the Chilean National Economic Prosecutor Office's (FNE) accusation that four salmon aquafeed producers colluded to fix prices have been highly critical of the accused parties and supportive of government measures to increase controls, particularly within the context of social upheaval that has rocked the country in the last few months.
Government ministers have called for severe penalties for BioMar Chile SA (BioMar), Comercializadora Nutreco Chile Limitada (Skretting), EWOS Chile Alimentos Limitada (EWOS), and Vitapro Chile SA (Salmo Food) if they are proven to have fixed the prices of fishmeal and fish oil.
“The Government of Chile does not tolerate these abuses and condemns them categorically,” the undersecretary for fishing and aquiculture, Román Zelaya, said on his Twitter feed. He called for in-depth investigations “so that all the weight of the law falls on those responsible.”
Economy Minister Lucas Palacios, interviewed on national TV, highlighted the fact that Chile is the second-largest player globally in the salmon business. High costs in feed have a knock-on effect in prices to the end-consumer and “if there is collusion to increase the price of feed, the effect on the market is clear.”
Treasury Minister Ignacio Briones called the allegations of collusion “robbery,” calling for “maximum penalization.”
“Collusion is the highest crime against free competition, as it attacks consumers and the possibility of accessing the best price and the best quality. At the same time, it compromises public faith, trust, and market legitimacy,” he posted on Twitter. “Because of this, these violations of the law should be pursued and severely punished, including jail time and fines that should be higher than the ill-gotten gains.”
According to Briones, the collusion threatens Chile’s reputation as having one of the freest markets in South America.
“A market economy in which equality before the law is not perceived, when abuse is committed, is a market economy that is condemned to failure. A market economy that does not severely penalize attacks to free competition, is a market economy that stops being a market,” he added in an interview on Radio Oasis.
In light of the 22-page summons by the Chilean National Economic Prosecutor's Office (FNE) made public on 19 December, industry association SalmónChile announced the decision to suspend the four accused companies.
"The facts investigated and then denounced by the FNE undermine the principles promoted by SalmonChile and its continuous efforts to contribute to the dissemination of good practices,” it said in a statement. “We emphatically reject any conduct that threatens free competition, transparency, and the proper functioning of markets.”
The president of the Confederation of Production and Commerce (CPC), Alfonso Swett also denounced the suspected collusion.
“The work being carried out by the National Economic Prosecutor's Office ensures respect for free competition … Giving FNE more tools [to investigate collusion] points in the right direction to punish abuses with maximum severity,” he said. “This is yet another case that’s as serious and shameful as the previous ones.”
The CPC head was referring to other widely criticized cases of price-fixing that have shaken the Chilean market. Some of the most emblematic cases include:
- In 2012, the Supreme Court upheld the sentence against pharmacies Ahumada, Cruz Verde and Salcobrand for illegal pricing between 2007 and 2008. They were fined some USD 20 million (EUR 17.9 million).
- In 2015, the Supreme Court confirmed the sentence against chicken farmers Agrosuper, APA, Ariztía and Don Pollo for collusion under a cartel that lasted for at least 10 years, ordering them to pay USD 58 million (EUR 52 million) in fines.
- In 2017, the free competition tribunal TDLC condemned pulp firms CMPC and SCA (Chile) for colluding in the allocation of market quotas in the sale of toilet paper and tissue, setting prices from 2000 to 2011. Fines of USD 18 million (EUR 16.1 million) were applied.
- In 2019, the TDLC found supermarket chains Cencosud, SMU and Walmart guilty of agreeing to set prices in the sale of chicken meat between 2011 and 2018, levying USD 12.4 million (EUR 11.1 million) in fines. The retailers have asked for lower fines.
“The FNE’s latest accusation of collusion has much to do with the explosion of social protest that has affected the country in the last few months,” Lino Solís de Ovando, content director at Latin America’s most important business journal, América Economía, told SeafoodSource. “A significant part of the ‘bomb’ that exploded in this protest has to do with privileges and white-collar crimes in this country. They are substantial and getting more diverse, and they are some of the most embarrassing and humiliating things that can happen to the consumer.”
Solís de Ovando linked the alleged collusion to nationwide protests that have shaken Chile’s economy.
“This had all the trappings of a cartel, with code words and false names to avoid getting caught by the authorities,” he added. “These situations cause outrage and can lead people to lose faith in the system, in democracy itself which is nourished by the rules of capitalism. This is considerable – it is not a small matter – and it is paradoxical: those who have the most vested interests in making capitalism shine, are ruining it. That’s an outrage. That’s perversion, because they don’t have much to lose and they don’t care about what happens to the rest, and it’s what has Chile in the situation it is in today.”
Given the “seriousness of the infraction, the economic benefit obtained, conscience of the illicitness of their conduct and the dissuasive effect,” FNE has asked the TDLC to levy the maximum fine of 30,000 annual tax units, known as UTAs, equivalent to CLP 17.9 billion (USD 23.6 million, EUR 21.3 million) for each of the three offenders, regardless of their size in the market. The TLDC is currently considering if a penalty should be administered and what the amount should be.
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