David Scott is the managing partner of Scott+Scott, a law firm specializing in plaintiff and claimant work in antitrust, commercial, and securities actions.
SeafoodSource: The European Commission recently advanced an antitrust investigation involving Norwegian salmon producers Cermaq, Grieg Seafood, Bremnes, Leroy, Mowi, and SalMar, alleging potential distortion of spot prices of Norwegian-farmed Atlantic salmon within the European Union, as well as potentially sharing commercially sensitive information related to prices and volumes between 2011 and 2019. How is your firm involved in this issue?
Scott: We've been involved in a lot of really large antitrust cases, and we’re involved in this case through our European offices. Typically, in antitrust cases, we represent institutional money, pension funds, and multinational corporations that have suffered a harm as a result of a cartel, where two horizontal competitors have gotten together and fix the price on something.
This is an interesting case. In my experience, when you see these types of indexes – these benchmarks that companies use– they're often opportunities for the people who contribute into the benchmark to engage in nefarious conduct because you can pull back and play games; that's what they did here.
SeafoodSource: A group of U.K. retailers already filed suit in March 2024, alleging GBP 675 million (USD 865 million, EUR 790 million) in damages. What is the status of the legal action you’re considering in relation to the Norwegian farmed salmon price-fixing allegations?
Scott: If the commission makes a finding of competition law violation, it's game over regarding liability. It becomes a damages play, or a prove-up, which are called follow-on actions.
What you want to do is wait to see what the commission does. In this case, the commission has yet to come up with a decision. It has issued a statement of objections, which is like a complaint, and the defendants will have an opportunity to respond. Then, there will be a finding, and we'll see what happens there. So, we have not filed [anything] yet, but we are consulting with several very large victims – purchasers – who have asked us to start to put things together.
SeafoodSource: In civil actions stemming from the canned tuna price-fixing scandal in the U.S., there were dozens of separate settlements with different classes of litigants and individual companies. If the European Commission determines there was price fixing regarding Norwegian farmed salmon, will the civil litigation process play out in a similar way?
Scott: It's a little bit different. There's no class-action recognition in Europe, though there are in some individual countries with some mechanisms similar to class-action lawsuits. In the Netherlands, there is the Dutch class-action mechanism, where you can bring an action on behalf of Dutch victims. In the U.K., there is the Consumer Rights Act, but it's very limited in terms of how it operates in that it’s only applicable to competition cases and operates as an opt-out system for U.K. residents and opt-in for non-U.K. residents.
So, in almost all these cartel cases, they're going to be individual cases. We're going to bring a case on behalf of a company against all of the alleged cartels and then will negotiate directly with each of them.
SeafoodSource: Will these suits be filed in each individual country in which there was allegedly price fixing, or is there a centralized E.U. court these suits can be filed in?
Scott: Well, there is an E.U. court, but what you can do is file in the Netherlands if you have an anchor defendant that is either located there or has a subsidiary which does substantially the same type of business there. With that, you can then get jurisdiction.
SeafoodSource: Is there an optimal place to file?
Scott: There are three jurisdictions, and [not] surprisingly, they are the three jurisdictions where we have offices. The Netherlands is a great jurisdiction because a lot of companies are in the Netherlands because of the beneficial tax treatment that they get under Dutch law. Germany is another very good jurisdiction. The U.K. was a pretty good jurisdiction, but since Brexit, it has become much more complicated. The problem with the U.K. now is it's a very expensive jurisdiction because there's loser pay at every step of the case, so with every single motion you lose, it can become very expensive.
SeafoodSource: With different firms filing on behalf of different clients in different countries, is there a risk of double jeopardy at all in these situations?
Scott: There is no double jeopardy because they are individual clients and individual cases.
SeafoodSource: How messy could this get?
Scott: It will get kind of messy, and here's why. In the U.S., to bring an antitrust case, you have to have standing, meaning you have to be a direct purchaser. In Europe, that's not the case; oftentimes, indirect cases are as valuable as direct cases. So, you may have a lot of different types of cases, but the interesting thing about this cartel is that the people who were injured were most probably the purchasers of the salmon. They weren’t buying directly from Mowi; they were buying through [retailers] like Marks and Spencer.
The defense of the fish companies is going to be that a lot of [retailers] didn't really suffer any damages because they passed the price increase on to the consumers. That is often the silver bullet that defendants try to use. The question will be, did these buyers, such as supermarket chains, pass on the price increase? What you'll see, and it depends upon the industry, is people arguing about who bore the brunt of the price increases or who felt the effects of the cartel. To that extent, it will be messy.
SeafoodSource: How is that proven?
Scott: One of the things you want to do in these cases is make sure that you really do a deep dive into the potential damages that a client may have suffered. You also want to make sure that you have the appropriate experts who are going to be able to create the regression analysis to perform the but-for analysis.
A complexity in this is how to determine what the price of the salmon should have been without the price fixing. We will hire economists who will perform a regression analysis; it is a tried-and-true approach to determining potential recoverable damages and creating the but-for world. What they will do is look at all the input variables that go into the pricing of salmon, and then they will determine what the price would be based upon all these variables and the price that the cartel charged. They’ll produce a graph showing the beginning to the end of the cartel period showing the but-for price split, which is called a structural break in economic terms, and then realign once the cartel has been publicized, whether through a whistleblower or a regulatory authority stepping in.
That delta is going to be your overcharge. If it's 20 percent for every EUR 1.00 (USD 1.09) spent, that’s a EUR 0.20 (USD 0.22) overcharge, and when you're talking about a really large multinational company, a really large supermarket, or a really large purchaser, the damages can be significant.
SeafoodSource: Can there be a penalty awarded on top of damages?
Scott: Not in Europe. In the United States, under the Sherman Act, there are treble damages. You don't get that in Europe. What happens in the U.S. is when the U.S. Department of Justice makes a finding of a cartel, a private litigant still has to prove liability. Judges will take judicial notice of the DOJ’s actions. It will be persuasive, but it's not binding. In Europe, it's binding.
SeafoodSource: Did the Norwegian salmon companies involved in the investigation dodge a bullet by already settling in the U.S. and Canada?
Scott: Not fully, because, remember, under U.S. antitrust laws, there is no extraterritorial reach of U.S. antitrust laws, subject to very limited exceptions. So, somebody who is injured in Germany can't come to the U.S. and say you violated U.S. antitrust laws and, therefore, [have to] pay me. So, they dodged the bullet in terms of being sued in the United States, but that does not prevent them from being sued in Europe.
SeafoodSource: The amount of time between when the investigation first became public in February 2019 and the European Commission’s January statement was quite lengthy. Is it unusual to have that much of a lag?
Scott: It’s not completely unusual. If you look at the settlements that have occurred, I think they paid USD 85 million (EUR 78.2 million) in the U.S. for the direct purchasers, something like USD 33 million (EUR 30.4 million) for the indirect purchasers, and CAD 5 million (USD 3.7 million, EUR 3.4 million) in Canada.
Just reading tea leaves, in my experience, defendants most of the time don't settle cases for USD 85 million unless they think they have got some exposure. I don't know where they were procedurally in the U.S. action – I don't know if they had gone into heavy discovery – but maybe they did dodge a bullet because they may not have known the full extent of the anti-competitive conduct. I don’t know the answer to that, but then they didn't pay a nuisance value settlement.
SeafoodSource: Do you have a ballpark estimate of what this might cost the Norwegian salmon industry? Do you have any idea at this point?
Scott: I don't. An estimated 2.9 million tons of Atlantic salmon was sold globally in 2022. Norway is the largest global producer of Atlantic salmon, accounting for 1.5 million tons of the supply per year. That's a big number. Over the past two decades, production has almost tripled, with global production at 894,000 metric tons in 2000 and over 2.7 million MT in 2021, so the value of commerce is large.
It all depends upon the size of the overcharge, and I'll tell you what's going to happen. The claimants’ expert will say the overcharge was one thing, and the defendants will say they are such bad cartelists and conspirators that they caused no harm – that the overcharge should be between zero and 1 percent. That will be where the where the rubber hits the road.
SeafoodSource: Is it beneficial for these plaintiffs that are considering legal action to wait until the E.U. investigation advances further?
Scott: We have had a lot of outreach from potential victims who have asked us to analyze data. That’s the first step because if you don't have any damages, you don't want to waste time with a case and you're not going to have any plan.
What we counseled people to do is if they are interested in examining whether there's a recoupment opportunity, we asked them for their data. We then do an analysis of the data to at least get a ballpark, and we say you've got a potential damage claim of EUR 100 million (USD 108.7 million), which is a big claim. But, another company with potential damage of EUR 500,000 (USD 543,000) might not want to waste time on a claim that size.
After gathering the data, we’ll talk about next steps because there may be a more nuanced dance to be done. In these cases, these are long-term relationships, so there is a tremendous opportunity for monetary recoupment – things to set the relationship right.
Often, the European claimants are very angry that they have been taken advantage of by one of their suppliers, and that turns the relationship upside down. So, there's an opportunity for the cartelists to say, “Look, we made a mistake. What can we do to make this right?” Those negotiations are often more than just the legal discussions in court. It's much more of a dialogue. On numerous occasions, we have had opportunities to recoup money for victims without ever having to go to court because the suppliers say, “We understand we screwed up, and we would like to make this right.”
SeafoodSource: Those settlements are private, correct? There would be no public record of them?
Scott: Unless it's material and goes into the record somewhere. In Europe, you could never look up the cases that we have filed. Everything is private, and the clients like it that way. The defendants also like it that way because it gives them an opportunity to settle under the radar without putting a target on their back.
SeafoodSource: What is your advice to companies that feel they have been harmed by this alleged price-fixing?
Scott: What is really important here, and I say this as somebody who's done this a long time, is victims don't want to wait. They can't and should not wait. They have to put together a recoupment plan, and the recoupment opportunities in these cases are significant.
This is not like a U.S.-style class-action, where a large number of people are collecting small amounts of money. In our cases, there is often significant money coming back to these corporations that have been victims. So, I always just like to tell people, whether I represent them or they bring me in, that they should put a plan in place and get a process and procedure on how they're going to make an informed decision on what it is what they should do. That’s really the takeaway on this.
