Feed producers facing $70m fine over alleged cartel
Chile’s National Economic Prosecutor’s Office (FNE) has requested heavy fines for three of four feed companies accused of price-fixing.
The Chilean branches of BioMar, Skretting, EWOS and Salmofood are accused of setting the sale prices of salmonid food between at least 2003 and 2015, in two ways: by coordinating the prices of diets and the volumes of food supplied to customers, and through the coordination of the prices of some of the most relevant raw materials that make up the food and charged to customers in price lists.
FNE has asked Chile’s Court of Defence of Free Competition (TDLC) to apply a fine of a fine of 30,000 tax units each to BioMar, Skretting and Salmofood, which amounts to approximately US $70 million in total.
FNE asked the TDLC to exempt EWOS from fine for acting as the whistle-blower about the existence of the agreement following its takeover by US feed giant Cargill.
EWOS, which was bought by Cargill in 2015, provided the background that gave rise to the investigation and evidence that was later strengthened through various proceedings, including entry, registration and seizure of company offices and statements of various executives.
“Our investigation was based on the confession of one of the members of the cartel, which only confirms the essential role that compensated delation (an accusation, especially by an informer) plays in the detection and prosecution of collusion,” said FNE prosecutor Ricardo Riesco.
Cargill said that “shortly after the closing of the acquisition of EWOS from Altor and Bain Capital in 2015, our employees of EWOS in Chile informed us about practices in the entire feed industry of salmon in Chile that were inconsistent with Cargill’s Competition Policy and possibly violated Chilean competition law. For this reason, we initiated an investigation, whose results we made available to the FNE in January 2016”.
It added: “The practices - limited only to Chile - included contacts with competitors that contravened the Competition Policy and the Cargill Code of Conduct and were immediately eradicated.
“We have collaborated decisively with the FNE. Doing business ethically is essential for Cargill. The company has already trained all its employees in Chile about our principles and compliance policies, including our Competition Policy.”
Salmon producers’ organisation SalmonChile said: “We consider the facts denounced by the FNE to be of the greatest seriousness and we appreciate that this type of investigation is carried out in order to protect the existence of transparent and competitive markets.”
The FNE said the large fines were requested “due to the seriousness and temporary extension of the agreement since the required companies are the only ones that sell salmon food in Chile, so their customers had to pay the cartel prices by not having alternative offers. According to the research, the price of food accounts for more than 50% of the total cost of salmon.”
All four feed companies are foreign owned. BioMar is Danish, Skretting is owned by Dutch firm Nutreco and Salmofood is Peruvian.