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Salmon giants hold steady after US distributor launches price-fixing case

Euclid Fish Company is suing several Norwegian salmon farmers following an EC probe into alleged price fixing. Photo: BiteBuff.com
Euclid Fish Company is suing several Norwegian salmon farmers following an EC probe into alleged price fixing. Photo: BiteBuff.com

The value of shares in Norwegian companies that own three of Scotland’s major salmon producers took a slight but relatively insignificant dip of between 1% and 2.5% today after news yesterday that they were facing a class action lawsuit in the United States.

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The US operations of Mowi, Grieg Seafood and Scottish Sea Farms co-owners Lerøy and SalMar are being sued for alleged price fixing by Ohio-based distributor Euclid Fish Company.

Norwegian farmer Bremnes Seashore and its sales company Ocean Quality – which also markets Grieg Seafood’s products – are also included.

The lawsuit, filed at a federal court in Miami on Tuesday and first reported by Undercurrentnews.com yesterday, follows an investigation into anti-competitive behaviour by the European Commission.

Offices raided

EC investigators raided Mowi, SSF and Grieg offices in Scotland in February, although it appeared the real focus of their probe was Norway. The inspectors do not have direct access to the companies’ Norwegian offices because Norway is not an EU member state and does not come under the same EC jurisdiction as the UK.

Norwegian news site E24 has been granted access to Euclid’s lawsuit, which alleges illegal activity took place between July 1, 2015 up to the present day.

“This lawsuit is based on illegal co-ordination of prices for direct buyers of farmed salmon and salmon products therefrom (such as salmon fillet and smoked salmon) sold directly by [the defendants],” said the initiation of the application.

Cost increases

According to E24, Euclid writes that “the defendants often - and mistakenly - claimed that cost increases justified price increases, but their own data disproved this alleged justification”.

The action is delivered on behalf of “all persons and entities in the United States and its territories who have directly purchased farmed salmon [...] from one or more of the defendants”.

Euclid’s lawsuit includes a letter sent by the European Commission to the salmon farmers in February, claiming that they have:

  • Coordinated sales prices and exchanged commercially sensitive information.
  • Agreed to buy products from competitors when these competitors had lower prices.
  • Taken advantage of a coordinated strategy to increase the spot price of Norwegian farmed salmon to ensure higher price levels for long-term contracts.

‘Seen to be negative’

Grieg Seafood and Mowi confirmed to E24 that they were aware of the lawsuit and both denied any anti-competitive activity.

In its morning report today, Nordea Bank stated: “Our conclusion at the time, with regard to the EU investigation, was that companies could risk fines of up to 10% of global annual revenue. The value of the fines for Mowi would then correspond to 2/3 of the total dividend payments in 2018.

“However, the timeline is unclear, and we expect these cases to extend over several years. Nevertheless, a renewed focus on the case and the fact that it has now spread to the United States, is seen to be negative for Mowi and the other companies.”

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