The following article is a written adaptation of an episode of Thrilling Tales of Modern Capitalism, Slate’s new podcast about companies in the news and how they got there.
This story is about the canned tuna business and the three big companies that dominate it. It’s a story about price fixing, and it’s a saga so dark and disruptive those companies are still reeling from it, facing bankruptcy, legal action, even prison time. It’s a story that upended a century-old industry—but if you ask Cliff White, executive editor of the news website SeafoodSource, he’ll tell you there’s way more at stake than just business: “Price fixing is absolutely wrong, especially for a product that people depend on. That’s the difference between them eating dinner and not eating dinner. That’s canned tuna. We’re not talking about bluefin toro that’s served at Nobu.”
Tuna has been eaten all over the world for thousands of years. In the United States, it was at one time a food mostly associated with immigrant communities—Japanese Americans who fished it in the waters off California, or Italian Americans who’d grown up eating bluefin from the Mediterranean. What turned it into a universal staple was a new technology: canning.
Anna Zeide, founding director of the food studies program at Virginia Tech, explains: “Right around the turn of the 20th century is where you start to see a really focused effort on the part of early tuna canners to build an industry. Canned tuna has this really meteoric rise from being a very marginal food that very few people ate in the early 20th century to being an embodiment of canned food and American processed food by the 1950s and ’60s.”
There were once dozens of independent tuna canners, but by the 1960s the industry had consolidated, with just three companies combining for 80 percent of market share. StarKist, the No. 1 brand in the category for many years running, was founded in 1917 by a Croatian immigrant in California. Chicken of the Sea, known as the discount brand with cheaper prices, was founded in 1914, also in California. Bumble Bee started as an association of canners in Oregon back in the 1890s.
Tuna’s big three brands thrived in the 1960s and into the early ’70s, but then the tide turned. The 1970s saw consumers increasingly worried about the tuna they were eating. They worried about how much mercury they were absorbing along with the tuna, and they worried about the other ocean life getting swept up in the tuna boats’ big nets, especially the dolphins. Perhaps the biggest problem for the industry in recent years, though, is the consumer’s changing palate. Canned tuna was a staple of the mid–20th century American pantry, but per capita, canned tuna consumption has dropped around 40 percent since the mid-1980s. “I think canned tuna is looked at as—no offense—an old person’s product,” says Cliff White. “I don’t see too many of my peers in the 35-and-under cohort eating too much canned tuna.”
Canning facilities for the big three companies have shifted away from the West Coast. They’ve moved, in some cases, to territories like Puerto Rico and American Samoa, where wages are lower but, because they’re still technically on U.S. soil, there aren’t any import tariffs. Those big three brands themselves have changed ownership again and again over the years, with companies like Pillsbury, Heinz, and Ralston Purina all dipping their toes in the tuna business. These days, the big American tuna companies aren’t American. White says: “When you talk to the old tuna hands, what they’ll tell you is it’s a shame, because tuna used to be such an American industry. It’s an iconic American industry.”
By 2015, StarKist was owned by a South Korean conglomerate, Chicken of the Sea was owned by a company from Thailand, and Bumble Bee belonged to a British private equity firm. That was the year one of the big three tried to buy another—and this is when the fish really hit the fan. In 2015, Chicken of the Sea struck a deal to buy Bumble Bee. That would have left only two big players in the industry, a sort of canned-tuna duopoly. So the Department of Justice launched an antitrust review, and in the course of that review, the DOJ discovered something fishy. It turned out that for a few years the big three brands had been in cahoots with one another. They were illegally fixing prices, rigging the game so that each can of tuna on the grocery store shelf cost shoppers a few pennies more than it should have.
When the feds cracked down, Chicken of the Sea immediately turned stool pigeon of the sea and cooperated with the government to avoid prosecution. StarKist pleaded guilty, as did Bumble Bee, and together they paid fines totaling $125 million. Some high-up seafood executives got caught in the net. Those men mostly pleaded guilty, but one maintained his innocence. He insisted on a trial to prove he’d done nothing wrong, so the full prosecutorial weight of the U.S. Department of Justice was brought to bear against one tuna kingpin: Chris Lischewski, the longtime CEO of Bumble Bee.
“He is an outsize character, for sure, in the seafood industry,” White says of Lischewski. “We’re talking a guy who has a shoulder-length silver mane of hair slicked back, definitely dapper and super friendly, definitely knows he’s the head of a company when he walks in the room, definitely has an air of confidence about him—but also West Coast, like surfer meets boardroom.”
Price fixing is nothing new. It’s happened forever in every kind of business, in all sorts of ways. What the tuna companies did was share confidential pricing information with one another so they could keep their prices in sync, meaning customers didn’t get the benefit of a competitive tuna marketplace. Basically, as Cliff White points out, they treated one another as allies and customers as their opponents: “What we saw in the period in question, which was 2011–2013, was the prices of canned tuna rise when they probably shouldn’t have. You saw things like a 10-for-10 deal, where you had 10 cans of tuna being sold for $10, going by the wayside—those types of deals disappeared. And you also saw, at that point, the sizes of canned tuna go from 6 ounces to 5 ounces, so there was less tuna per can. So there was a bunch of various techniques used to put less product in a can and charge more for it.”
Price fixing often begins organically. People in an industry might meet one another at conferences, or executives might switch jobs from one rival to another—for instance, Chris Lischewski worked at StarKist before he went to Bumble Bee. They all become friends and talk all the time, which creates lots of opportunity to share information they shouldn’t. “It was incestuous, as Chris Lischewski put it, and that was a problem that came up at trial, that everyone acknowledged,” White says.
As for motivation, executives’ bonuses are often tied to profit numbers. If everyone’s profits are good, everybody gets bonuses. They all win—except the customer, who loses. During the period when tuna price fixing happened, Chris Lischewski had a particularly powerful motivation to goose his profits: He needed to make Bumble Bee attractive to potential buyers because if the company got bought, he stood to personally pocket more than $40 million from the sale. So he tried to call a truce with the two other big brands—don’t compete on price, cooperate to keep prices up. At the trial, Lischewski took the stand in his own defense. He claimed he knew nothing about any price fixing and that the plan had been hatched by a pair of his Bumble Bee underlings without his knowledge. But those men testified against Lischewski, and they painted a very different picture—“stories about dinners they went out to with Chris Lischewski that sounded like a Mafia meeting,” White says.
A lot of saucy details came out at the trial. There was a fancy dinner at a Southern California steakhouse where a StarKist executive handed over a thumb drive full of pricing information. Chicken of the Sea’s chief operating officer testified that at one point he faked a car accident to get out of a meeting with Lischewski because he was so uncomfortable about getting roped into Lischewski’s scheming. One Bumble Bee sales guy broke down in tears on the witness stand saying he couldn’t face his kids if he didn’t tell the truth about what he’d done. In the end, after just 30 minutes of deliberation, a jury found Lischewski guilty of a conspiracy to fix prices. In June, Lischewski was sentenced to more than three years in federal prison. As the New York Post put it, “now he’ll be the one spending time in the can.” After the verdict came down, an unrepentant Lischewski got in touch with White, hoping to explain his actions to the readers of SeafoodSource—“which was a surprise,” White says. “Usually you don’t hear from someone after they’re convicted.”
Did Lischewski think what he did was wrong? “I don’t think so,” says White. “I think he feels like he was targeted unfairly, and that there were maybe some things that were gray areas, but nothing that crossed a line into illegal behavior.”
Meanwhile, the DOJ has moved on to investigate price fixing in other food industries, like beef and chicken. For the big three tuna companies, the saga isn’t over—they still face civil suits from restaurants and grocers. Bumble Bee filed for bankruptcy in November and was soon after bought by a Taiwanese fishery, meaning all of the big three are now owned by Asian companies, which are based closer to where the fish are mostly caught these days.
The problems that might’ve made the tuna industry ripe for collusion—it’s a commodity product in decline with razor-thin margins—haven’t gone away. Canned tuna actually got a sales boost from the onset of the COVID pandemic, as people stocked their pantries with all manner of shelf-stable goods, but it remains to be seen if that will be lasting. The longer-term trend has been toward fresh foods. One tuna executive said he doesn’t think millennials even own can openers.
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