1. The US Department of Justice has recently announced that StarKist has agreed to plead guilty to a charge of price-fixing in relation to a conspiracy with officials from other tuna companies to fix the price of canned tuna that ran from at least late 2011 to late 2013 and came to light in 2015. The company faces a potential fine of $100 million. The canned tuna market in the US has long been dominated by the following three companies: StarKist, Chicken of the Sea and Bumble Bee. Bumble Bee agreed to plead guilty in May 2017 and paid a fine of $25 million. Chicken of the Sea has not been charged because prosecutors say the company exposed the scheme and co-operated with the investigation.
Describe the facts of this case in relation to what the companies involved were doing to implement the anti-competitive scheme.
Raw tuna is an input for the production of canned tuna. Explain your expectation with respect to what the normal relationship should be between the price of raw tuna and the price of canned tuna. Explain the relationship between the price of raw tuna and the price of canned tuna in this case and describe how this relationship played a role in the anti-competitive conspiracy being exposed.
Describe how Merger & Acquisition activity among suppliers in this market impacted competition and played a role in the price-fixing activities being exposed.
Describe how the collusion and price-fixing in this case impacted consumers in the US market.
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