Three tuna corporations control fully 78 percent of the market.

Starkist controls 30 percent.

Bumble Bee has 28 percent.

And Chicken of the Sea has 20 percent.

That’s what’s known as an oligopoly — when a handful of companies control the market, crush the competition and drive up prices.

And now, the Justice Department has opened a criminal price fixing investigation into the tuna industry.

In all likelihood, there’s a whistleblower inside one of those companies who has the goods and has approached the Justice Department.

Tri-Union is being represented by John Terzaken at Allen & Overy.

StarKist is being represented by Belinda Lee at Latham & Watkins.

Bumble Bee is being represented by Ted Hassi at O’Melveny & Myers.

In July 2015, the Olean Wholesale Grocery Cooperative filed a lawsuit in federal court in San Diego alleging that the three companies conspired together to jack up the prices of canned tuna.

Olean is being represented by Christopher Lebsock, a partner at Hausfeld in San Francisco, is representing Olean.

How did the case come in the door?

“Tri-Union Seafoods owns their Chicken of the Sea canned tuna brand,” Lebsock told Corporate Crime Reporter in an interview last week. “Their parent company is a company called Thai Union. Thai Union made an announcement that the Department of Justice had opened a criminal investigation. Thai Union at the time was in the process of attempting to merge with one of the other major canned tuna companies — Bumble Bee. Thai Union had issued a share offering to raise the money to make this merger. With the announcement of the criminal investigation, Thai Union suspended this share offering and refunded those who had already made deposits. That caused us to investigate what had been going on with canned tuna pricing over the past few years.”

“And what we found out was that tuna can sizes had decreased and prices had increased or remained stable during periods of time when skipjack prices declined. Skipjack is a type of tuna. It’s a benchmark to assess the wholesale price of tuna caught off the boat.”

The tuna market is an oligopoly. What is that?

“According to our complaint, there are three major competitors. An oligopoly is a market where there are a small number of players. Their marketing decisions can be described as interdependent. An oligopoly is a concentrated market. Compare that to a competitive market where there are many competitors and no one competitor can influence what another is doing.”

“In the processed canned tuna industry, you have three major players in the United States. You have Tri-Union, which owns Chicken of the Sea, you have Starkist and you have Bumble Bee Foods. Together they have probably 70 percent to 75 percent of the market for their branded name products. But they also do what is called white labelling — canning for different entities where a Costco label or a Wal-Mart label will go on the product.”

What percentage of the market do they have?

“It has fluctuated over time. But roughly speaking, each has about a third of the market. And it fluctuates up and down.”

What is the allegation in the Olean lawsuit?

“The allegation is that these major canned tuna companies have conspired, tacitly or explicitly, to increase or stabilize the price of canned tuna or other packaged seafood products.”

Is it a class action lawsuit?

“Yes. We have filed a class action on behalf of direct purchasers of canned tuna. Other lawsuits have been filed by direct purchasers who are in essence opting out of the class action and proceeding in their own case.”

“There are some lawsuits by commercial food preparers. For example, there is a lawsuit by Capitol Hill Supermarket. They are alleging that they paid more for canned tuna that was used in tuna salad and the preparation of sandwiches at their deli counter.”

How many lawsuits are there?

“Eighteen or so.”

Is this one the only one Hausfeld is involved with?

“Yes. But, we have filed a motion with the Judicial Panel on Multidistrict Litigation to centralize all of these lawsuits that have been filed in various jurisdictions in the Southern District of California.”

“Often in criminal antitrust cases, one of the companies will come in as an amnesty applicant. If they are the first in the door to report criminal behavior within their company, they can get amnesty. And that means that their executives will not face criminal prosecution. They won’t have to go to jail. And the company itself does not get fined by the Department of Justice. There are tremendous benefits to expose the conspiracy to the Department of Justice.”

Is it a get out of jail free card?

“In the sense that there is no criminal prosecution by the Department of Justice.”

Do we know which company is the amnesty applicant?

“We don’t. Although, I have a feeling, and this is just my speculation, that Tri-Union is the amnesty applicant.”

What is that based on?

“That’s based on the timing of their announcement of the criminal investigation and the withdrawal of their share offering.”

Doesn’t a guilty plea make your case a slam dunk?

“It helps, but it certainly doesn’t make it a slam dunk,” Lebsock says. “It helps with the issue of whether there was wrongdoing. But in a class action that’s not the only thing we have to prove. In fact, one of the more complex, time consuming and expensive issues is certification of the class and showing common impact. The defendants will typically say that while they may have conspired, their conspiracy was totally ineffective and didn’t impact pricing at all. We have to fight that off. And it’s a complex process to do that. We have to estimate what would have happened in a world without the conspiracy. We have to look for other benchmarks, similar products, similarly structured industries — to see what would have happened in similar industries if there hadn’t been a conspiracy on pricing.”

If there is no finding of criminal wrongdoing against the amnesty defendant, does that make your case against the amnesty defendant more difficult than against the others that pled guilty?

“It changes the dynamic — and here’s how. The amnesty applicant never pleads guilty. They confess the crime to the Department of Justice lawyers. But they do not admit guilt in a public court filing. And in that sense, there isn’t a public admission of guilt.”

“The second thing that makes it more difficult for us, under this amnesty program, there are also implications on the civil case. Under civil antitrust law, antitrust violators are liable jointly and severally for all damages — not just for their own sales but for the sales of all of their conspirators. You can look to one defendant to get your damages. But under this amnesty program, the amnesty applicant is only liable for the damages caused by their own sales.”

“Also, typically in an antitrust case, the prevailing plaintiff can recover treble damages — three times actual damages. It’s designed as a deterrent to anti-competitive behavior. But the amnesty applicant doesn’t have to pay treble damages — only actual damages. The removal of joint and several liability and treble damages often means that the amnesty applicant gets away by paying a smaller damage amount.”

“Their ability to take advantage of those civil benefits requires timely cooperation. And in the tuna case, we have sent letters requesting timely cooperation to all of the defendants. We want to put them on notice that whoever the amnesty applicant is, if they expect to receive the benefits of detrebling and several damages, they need to come to us and give us information they have provided to the Department of Justice and they need to do it in a timely manner.”

[For the complete q/a format Interview with Christopher Lebsock, 29 Corporate Crime Reporter 37(11), September 28, 2015, print edition only.]