S1: I am out on Deer Isle near Stonington, Maine, which is, I would say, the lobster capital of the world, if you’re eating lobster dinner tonight, chances are it came out about about 400 feet behind me. I mean, seafood is the culture here. And so feeling like I’m covering a business that is vital to the place that I live feels really like I’m doing something meaningful with my life, hopefully with weight.
S2: Is the executive editor of Seafood Source, an online news site that covers the global seafood industry, which reports mostly on seafood trade, news, mergers and acquisitions, the launch of a new aquaculture facility. Maybe one seafood company might poach an executive from another. That’s as sexy as it gets most of the time.
S3: Yeah, when I got into covering seafood, I did not think I’d be covering global stories of corporate intrigue. But here I am. Gosh, I don’t know. It’s hard to find a comparison for this story in the seafood world.
S2: The 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 disrupted. Those companies are still reeling from it and facing bankruptcy, legal action, even prison time. It’s a story that upended a century old industry.
S4: But if you ask Cliff White, he’ll tell you there’s way more at stake than just business.
S5: Price fixing is absolutely wrong, especially for a product that people depend on. That’s the difference between an eating dinner and not eating dinner. I mean, that’s canned tuna. You know, we’re not talking about bluefin Toro that’s served at Nobu.
S6: What went wrong in the canned tuna business? How did it start to stink so bad?
S7: I’m Seth Stevenson. Welcome to Thrilling Tales of Modern Capitalism. Today on the show, a tuna tale, starkest bumblebee, chicken of the sea and the sinking of seafood empires.
S6: Before we think our teeth into the criminal underbelly of the tuna industry, let’s set the table by diving into the history of how tuna found its way into so many American kitchens. 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.
S8: Certainly 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 on.
S4: Aveda is a founding director of the food studies program at Virginia Tech and the author of Can’t the Rise and Fall of Consumer Confidence in the American Food Industry.
S8: You have technological processes that emerged that allowed tuna to be steamed so that the flesh became lighter, less oily, therefore more appealing.
S4: The industry got jumpstarted by World War One when beef and other meats got rationed. But you could eat all the tuna you wanted. During the Great Depression, cash strapped families saw tuna as an inexpensive source of protein. When World War Two began, tuna again escaped rationing laws by the middle of the century. Canned foods in general and tuna in particular have become ubiquitous.
S9: Cantona has this really meteoric rise from being a very marginal food that very few people ate in the early 20th century to being sort of an embodiment of canned food and American processed food.
S6: By the 1950s and 60s, the target customer, Antunez postwar heyday was the suburban mom fixing a quick, inexpensive meal for her family. This was the era of the tuna noodle casserole, a dish made by combining a can of tuna, a can of peas and a can of cream of mushroom soup.
S9: The canning industry does a lot of the psychological research about what it is that makes people want to buy canned products and processed food in general. And one thing they discover is the sense that housewives don’t feel like they’re doing enough kind of domestic labor if they just open a can and serve it as is got to go home, get dinner ready, which there is something new to do with tuna. But if they can make that canned item an ingredient in a recipe, even if it’s just mix these three canned items together and bake it like a casserole, only quick and easy, that I could make it one that creates this feeling of having put yourself into the food, a sense of love that comes with food. And so it sells better than when it’s simply, you know, open this can of peas and put it in a bowl or anything you can do not.
S6: Various processed food companies conspired to invent this new form of cuisine.
S9: Helman’s Mayonnaise was one of the brands that would advertise tuna salad with branded tuna in the recipe that they would have in an advertisement. You know, Hellmann’s mayonnaise and chicken of the sea tuna Velveeta becomes a partner in creating the tuna melt. And then, of course, tuna noodle casserole, which relies on the Campbell’s cream of mushroom soup in its creation.
S10: Oh, I love you all. I know you. Look, I got to talk to you, baby. You’re terrific. I know what you are. Just like your ordinary tuna average.
S6: There were once dozens of independent tuna canneries, but by the 1960s, the industry had consolidated with just three companies, combining for 80 percent of market share. Starkest, the number one brand in the category for many years running was founded in 1917 by a Croatian immigrant in California.
S10: You just, you know, swim along with me. We fed with the Star Kiss type, its mascot, Charlie.
S6: The Tuna is a grumpy beatnik fish who’s always trying and failing to get caught by a star Kesk fishing boat.
S10: Sorry, Charlie, only the finest tuna is good enough for Starquest.
S6: More people like the taste of Starquest than Chicken of the Sea, known as the discount brand with Cheaper Prices was founded in 1914. Also in California.
S11: If you happen to see the.
S6: Changing its name seems weirdly defeatist, you don’t hear chicken companies calling themselves Duna of the Land in any way. Its mascot isn’t even a chicken. It’s a mermaid movie. The Bumble Bumblebee started as an association of cannas in Oregon back in the 1990s. Its mascot is a bee, which doesn’t seem ocean related.
S11: But whatever bumble bee, you can damage the precious taste in tuna. And you know something kids can tell to tunas.
S6: Big three brands thrived in the 1960s and into the early 70s, but then the tide turned.
S12: That’s a can of tuna fish suspected of containing more mercury than the government allows. A few days ago, it was on a supermarket shelf in upstate New York.
S6: Tonight, a progress report from 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. Congressman, why do you think it’s important to look after the porpoises? Here’s California Congressman Robert Leggett in 1977.
S13: And political standpoint, when you’re getting letters from little five year old kids all over the country and in volumes, certainly you respond to that flipper. I think the great television program has stimulated a love of this animal and it is very deep seated.
S6: And this problem is not just perhaps the biggest problem for the industry in recent years, though, is the consumer’s changing palate. Cantona 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.
S5: Here’s Cliff White again from seafood source in canned tuna is kind of looked at as no offense, but an old person’s product, I don’t see too many. You know, my peers in the 35 and under cohort eating too much canned tuna.
S1: I’m sure there are outliers. But this is a tough business, right? Oh, yeah. It’s incredibly tough. The margins are super thin. You’re fishing it halfway across the world. You have to bring it to a plant where it’s processed and then to supermarkets all over the country. And this is, you know, a product that can spoil, too. I mean, you’ve got to be quick and efficient with it. You’ve got to really have your supply chain locked in to make this even feasible as a product. And then it’s an extremely competitive product from a price standpoint. The average American consumer is not going to shell out for tuna, for canned tuna, I should say. They’ll pay thirty dollars for a sushi roll at a Friday night, you know, sushi fest, but they won’t pay that money for canned tuna. It’s just in their mind, canned tuna is a cheap, affordable meal.
S6: 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.
S5: 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.
S14: By 2015, starkest was owned by a South Korean conglomerate, Chicken of the Sea was owned by a company from Thailand, and Bumblebee belonged to a British private equity firm. That was the year that one of the Big Three tried to buy another. And this is when the fish really hit the fan.
S6: In 2015, Chicken of the Sea struck a deal to buy Bumblebee 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.
S4: It turned out that for a few years, the big three brands had been in cahoots with each other. They were illegally fixing prices, rigging the game so that each can of tuna on the grocery store shelf and 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, Starquest pled guilty, as did Bumblebee, and together they paid fines totalling one hundred twenty five million dollars. Some high up seafood executives got caught in the net. Those men mostly pled guilty, but one maintained his innocence. He insisted on a trial to prove he’d done nothing wrong.
S14: So the full prosecutorial weight of the U.S. Department of Justice was brought to bear against one tuna kingpin.
S5: It really just came down to Lecky, that was the big fish that the the DOJ went after. No pun intended.
S6: In the course of his reporting for seafood source, Cliff White has crossed paths many times with Chris Chayefsky, the longtime CEO of Bumble Bee. What kind of guy is Crystal Chayefsky?
S3: He is an outsized character for sure, in the seafood industry. I mean, so we’re talking a guy who has shoulder-length, silver mane of hair, slicked back, definitely dapper and super friendly, definitely knows he’s, you know, the head of a company when he walks in the room, definitely has, you know, an air of confidence about him. But also like West Coast, like surfer meets boardroom, he always seemed to have a tan even when, you know, we were in day three of a meeting in this cavernous conference rooms at a seafood conference, he’d always look like he’d spend some time under the sun despite his laid back look, Lisowski had a rep as an aggressive CEO.
S6: At times he was ruthless. Here he is speaking to students at USC, his alma mater, in 2010, not long before the tuna price fixing scheme began.
S5: No year competition. Well, I am a firm believer in competitive intelligence. I pay a lot of money to get it. I don’t do anything illegal. You don’t need to do a lot of things illegal.
S6: When a CEO speaks to college students, you’d think he wouldn’t need to specify that he doesn’t do anything illegal. You’d hope that would be assumed. But then listen again, he goes further. You don’t need to do a lot of things illegal. You don’t need to do a lot of things illegal. That was maybe a red flag.
S15: The Department of Justice, as stark as Chicken of the Sea and Bumble Bee Foods, conspired between 2010 and 2013 to keep prices artificially high. Starquest faces criminal fines up to one hundred million dollars after admitting to price fixing. The Justice Department says the company has agreed to plead guilty for its role in fixing the prices of packaged seafood sold in the US. A federal grand jury in California indicted the CEO of Bumble Bee Foods. It’s not the first price fixing scandal at Bumble Bee. The company agreed last year to plead guilty to one count of price fixing and to pay a fine of twenty five million dollars.
S6: Price fixing is a type of corporate collusion that always boils down to one thing.
S15: What he’s saying is the customers are our enemy. The competitor is our friend.
S6: That’s from a 2009 Matt Damon movie called The Informant about a different price fixing scandal, one that really happened in the 1990s and led to fines and prison time. 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 to share confidential pricing information with each other 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 each other as allies and customers, as their opponents.
S5: What we saw in the period in question, which was 2011 to 2013, was the price of canned tuna rise when they probably shouldn’t have. And you saw things like 10 for 10 deal where you had 10 cans of tuna being sold for ten dollars, kind of going by the wayside. Those type of deals disappeared. And you also saw at that point the sizes of canned tuna go from six ounces to five 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.
S6: Price fixing often begins organically. People in an industry might meet each other at conferences or executives might switch jobs from one rival to another. For instance, Crystal Chayefsky worked at starkest before he went to Bumblebee. They all become friends and talk all the time, which creates lots of opportunity to share information they shouldn’t.
S5: It was incestuous, as Kozlowski put it, and that was a problem that came up at trial.
S16: It kind of everyone acknowledged there’s this small circle of people all working, you know, three different companies that control 80 percent of an industry. So it’s an issue.
S6: 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 happens. Chris Lashinsky had a particularly powerful motivation to goose his profits. He needed to make Bumblebee attractive to potential buyers because if the company got bought, he stood to personally pocket more than 40 million dollars 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, Lisowski 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 bumblebee underlings without his knowledge. But those men testified against Laskowski, and they painted a very different picture.
S1: Stories about dinners they went out to with Chris Olszewski. That sounded like a mafia like meeting, you know. Like what? This doesn’t happen in seafood.
S6: A lot of saucy details came out at the trial. There was a fancy dinner at a Southern California steakhouse where a Starquest executive handed over a thumb drive full of pricing information. Chicken of the Seas chief operating officer testified that at one point he faked a car accident to get out of a meeting with Laszewski because he was so uncomfortable about getting roped into Lafsky scheming. One bumblebee 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. Cliff White says that anguish reflects the high stakes of the crime.
S1: I think this case really strikes a chord, and it could be potentially really sad if there’s people out there that did struggle more because their tuna cost more. That’s absolutely why antitrust regulations exist and that’s why these prosecutions happen.
S6: In the end, after just 30 minutes of deliberation, a jury found Laszewski guilty of a conspiracy to fix prices in June. Laszewski 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 Laskowski got in touch with Cliff White, hoping to explain his actions to the readers of Seafood Sauce, which was a surprise.
S5: Usually you don’t hear from someone after they’re convicted.
S6: Does he think what he did was wrong?
S5: I don’t think so. I don’t think he does. I think he feels like he was targeted unfairly and that there were maybe some things that were grey areas, but nothing that crossed the line into illegal behavior.
S4: Lisowski can ponder this from his prison cell for the next 40 months. Meanwhile, the DOJ has moved on to investigate price fixing and 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. Bumblebee 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 have made the tuna industry ripe for collusion. It’s a commodity product in decline with razor thin margins. Those haven’t gone away. Canned tuna actually got a sales boost from the onset of the covid pandemic as people stock their pantries with all manner of shelf stable goods. But it remains to be seen if that will be lasting in the longer term. Trend has been toward fresh foods. One tuna executive said he doesn’t think millennials even own can openers. These days, the Big Three are betting that the future of tuna might not be cans at all, but pouches easier to rip open with less of that metallic smell quite already made the switch.
S1: You know, it all stems if you really want to go back to a very personal experience I had feeding my grandmother’s cats tuna out of the can and having that smell when I was a kid and just I cannot get on board with it. But but pouched, I think they’ve minimized the smell and they’ve really gotten the flavors down, like I was mentioning that spicy Thai chili tuna. That’s a really freakin good. You should try it.
S14: That’s our show for today. This episode was produced by Jess Miller with help from Madeline Ducharme, Hannah Klein, Megan Karlstrom and lujah technical direction from Merritt. Jacob Gabriel Roth is Slate’s editorial director for audio. Alicia Montgomery is the executive producer of podcasts at Slate. June Thomas is senior managing producer of the Slate podcast network. Would you like to be able to listen to this and other Slate podcasts? Ad free? Consider signing up for Slate. Plus, it’s only thirty five dollars for the first year and it helps us bring you all the great podcasts you get from Slate. Sign up now at Slate Dotcom Drilling. Plus, next week on the show, what happens when the CEO of a beloved family owned food company offers fulsome praise for President Trump? We’re all truly blessed to have a leader like President Trump who is a builder. And that’s what my grandfather did. He came to this country to build, to grow, to prosper. Find out next week. More thrilling tales of modern capitalism.