Crowley Liner Services (CLSI) on Monday was slapped with a $17 million fine after pleading guilty to felony price fixing charges relating to its freight transportation business between the U.S. and Puerto Rico. CLSI, which is the liner freight arm of Jacksonville, FL-based Crowley Maritime Corporation, is the third company to be found guilty in connection to the price fixing conspiracy, joining Sea Star Line, another Jacksonville-based shipper, and struggling jones act carrier Horizon Lines.
CLSI plead guilty to the one-count felony charge filed yesterday in the U.S. District Court in Puerto Rico, alleging that Crowley Liner Services engaged in a conspiracy to fix base rates for seagoing transportation of certain freight between the continental United States and Puerto Rico from as early as January 2006 until at least April 2008, the Department of Justice says.
The charges allege that Crowley Liner Services, along with the companies, carried out the conspiracy by agreeing during meetings and discussions to fix the base rates to be charged to non-government purchasers of water transportation of certain freight between the continental United States and Puerto Rico. The department said that Crowley Liner Services and co-conspirators also engaged in meetings for the purpose of monitoring and enforcing adherence to the agreed-upon rates and sold Puerto Rico freight services at collusive and noncompetitive rates.
“Including this sentencing, as a result of the Antitrust Division’s ongoing investigation, three freight companies have been sentenced to pay criminal fines totaling more than $45 million and five executives have been sentenced to serve prison time totaling more than 11 years,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “By agreeing to fix prices for coastal shipping services to and from Puerto Rico, Crowley Liner Services and its co-conspirators thwarted the competitive process by forcing consumers to pay inflated rates for these services.”
On Dec. 20, 2011, Sea Star Line LLC was sentenced to pay a $14.2 million criminal fine and later on March 22, 2011, Horizon Lines LLC was sentenced to pay $15 million. Also five executives—including Gabriel Serra, Peter Baci, R. Kevin Gill, Gregory Glova and Alex G. Chisholm—have pleaded guilty. Frank Peake, the former president of Sea Star Line, was charged on Nov. 17, 2011, and is scheduled to stand trial on Jan. 14, 2013.
Crowley Liner Services pleaded guilty to price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations.
“We regret having any involvement whatsoever in this activity,” said Michael Roberts, SVP and General Counsel of Crowley Maritime Corp, parent company of CLSI. “Such conduct is contrary to our explicit policies, and violates our core values. It is absolutely unacceptable.”