Fishy Price Fixing Leads to 40-month Jail Stint

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On June 16, following a monthlong trial, Christopher Lischewski, former CEO and president of Bumble Bee Foods LLC, was sentenced by Judge Edward Chen of the Northern District of California to 40 months in prison plus a $100,000 fine for orchestrating a canned tuna price-fixing conspiracy. Lischewski’s sentence demonstrates the punishment individuals should be prepared to face if involved in price fixing and that such criminal behavior cannot be shielded by any corporate protections. Assistant Attorney General Makan Delrahim, head of the Department of Justice’s Antitrust Division, remarked that “[t]he sentence imposed … will serve as a significant deterrent in the C-suite and the boardroom.”[1] Indeed, Chen himself stated that Lischewski’s sentence was intended to send a message of general deterrence, particularly where a basic food staple relied upon by many households is concerned.

After a lengthy government investigation, Lischewski, along with other senior executives in the packaged seafood industry, was charged in 2018 with one count of price fixing. During his trial, the government showed evidence of Lischewski’s involvement with competitors and colleagues in the conspiracy, such as sharing pricing information with other executives in the canned tuna industry, including at Chicken of the Sea and Starkist, and their efforts to keep such meetings and communications covert. Lischewski’s defense argued that the government failed to show that consumers were harmed by any such price fixing, an element required in this kind of criminal case. Ultimately, however, the jury found Lischewski guilty of one count of price fixing. His attorneys have indicated they plan on filing an appeal.

Lischewski’s trial and sentence serve as an example to show compliance officers and in-house counsel what could happen without an effective and robust compliance program in place. Here, Bumble Bee had pleaded guilty for its role in a price-fixing conspiracy and already had agreed to pay a $25 million fine. Though when this sort of anticompetitive action happens, typically no one gets a prison sentence. And for many corporations, while a multimillion-dollar fine definitely hurts, it may not be enough of a deterrent (though in Bumble Bee’s situation, it did hurt, as the company had to file for Chapter 11 bankruptcy protection at the end of last year). But seeing Lischewski face prison time for more than three years, the punishment of breaking the law seems much more palpable. And in addition to the criminal punishment, Lischewski also now faces susceptibility to civil lawsuits.

The pursuit of Lischewski – from investigation to sentencing – must put all executives and business leaders on high alert that individuals who are involved in price fixing or other anticompetitive conduct will be held accountable by the government. Corporate heads should refrain from sharing pricing information with competitors and, likewise, should not take the bait when such information is requested. Pun intended.

[1] https://www.justice.gov/opa/pr/former-bumble-bee-ceo-sentenced-prison-fixing-prices-canned-tuna.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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