Chilean authorities accuse four salmon feed producers of price fixing and seek $70 million fine

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Feed giant whistleblower blows the lid on alleged “Toby Club” Chilean price fixing cartel.

Cooperativa.cl reports that Chile’s competition regulator, the National Economic Prosecutor’s Office (FNE) has accused four salmon feed feed producers of colluding with each other for 12 years to set the price of feed.

The companies accused are Chilean divisions of Biomar Chile, Comercializadora Nutreco Chile, Ewos Chile Alimentos and Vitapro Chile (Salmofood).

Cargill, Skretting, BioMar and Salmo had their offices raided in 2016 which was first reports by SalmonBusiness’ sister site Ilaks.

Chilean fish feed factory APSA. Photo: BioMar

Foreign-owned
The prosecution highlighted that all the companies were foreign-owned: Ewos owned by US giant Cargill (though brand’s head office is in Bergen, Norway), Biomar in Denmark; Nutreco in Holland (which owns Norway’s Skretting), and Salmofood in Peru.

The companies are accused of setting prices between 2003 and 2015.

National economic prosecutor, Ricardo Rioseco, said that the agency has requested an exemption for EWOS Group, a part of Cargill since 2015, because it acted as a whistleblower in the case.

The anti-competition authority shared some details behind how it alleges the feed companies colluded, saying the agreement was executed in two ways: 1) by coordinating the prices of the diets and also the volumes of food supplied; and 2) by coordinating the prices of some of the most relevant raw materials that make up the feed and that they charged to their customers in the price lists.

“Toby Club”
Authorities allege that companies colluded prices through emails, meetings and phone calls using keywords to avoid being tracked. They even called themselves “Toby Club” and “Ugalde Family.”

No-one in the company risks jail time because reform carried out in 2016 that again typified collusion as a crime. But the authorities are calling for a hefty USD 70 million fine split four ways.

Explaining the fine, the FNEs said that it is the “maximum amount contemplated in the law in force when the events occurred and amounting to about US $ 70 million in total.”

PHOTO SalmoFood

Possibly violated Chilean competition law
This is 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 because they did not have alternative offers. According to the research of the FNE, the price of food accounts for more than 50 percent of the total cost of salmon”.

The publication reported that Ewos said it will open an investigation and that company Cargill – owner of Ewos in Chile – said that employees had reported practices in this industry that “were inconsistent with the Competition Policy of that company and possibly violated Chilean competition law”.

“We have collaborated decisively with the FNE. Doing business ethically is essential for Cargill,” it added.

A spokesperson for Skretting told SalmonBusiness: “We only became aware of the allegations made by the FNE (Competition Authority) yesterday. We take competition compliance extremely seriously. We will therefore carefully review the complaint and present our case in due course”.