Florida-based Sea Star Line LLC agreed this week to enter a guilty plea with the Antitrust Division of the Department of Justice and pay a $14.2 million fine for its role in a conspiracy to fix prices in the coastal water freight transportation industry. A federal grand jury in San Juan, Puerto Rico also returned an indictment against Frank Peake, the former president of Sea Star Line, for his role in the price fixing conspiracy.
According to a one-count felony charge filed November 17 in the U.S. District Court of Puerto Rico, Sea Star Line engaged in a conspiracy to fix rates and surcharges for shipping freight between the continental U.S. and Puerto Rico from as early as May 2002, until at least April 2008. Meanwhile, the indictment indicates that Peake participated in the conspiracy from at least as early as late 2005, until at least April 2008.
According to the court documents, Sea Star Line and Peake, along with co-conspirators, had agreed to allocate customers of Puerto Rico freight services and to rig bids and fix the rates and surcharges to be charged to customers making shipping between the continental United States and Puerto Rico. The department said that the group 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.
On April 30, 2011, Horizon Lines LLC was sentenced to pay a $15 million criminal fine in relation to this same investigation, and five former shipping executives from both Sea Star Line and Horizon Lines were sentenced to pay a total of nearly $85,000 in criminal fines and to serve more than 11 years in prison, collectively.
Sea Star Line and Peake are charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations, and a maximum penalty of 10 years in prison and a $1 million fine for individuals.
“The proper resolution of this matter was important to us and we are pleased to have reached an agreement with the Department of Justice”, said Anthony Chiarello, President of American Shipping Group, Inc. and Manager of Sea Star. “The company remains committed to improving our operational excellence and looks to a brighter future serving our customers needs.”
This weeks charges stem from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the coastal water freight transportation industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section; the Baltimore Resident Agency of the Department of Defense’s Office of the Inspector General, Defense Criminal Investigative Service (DCIS); the Miami Field Office of the Department of Transportation’s Office of Inspector General; and the Jacksonville Field Office of the FBI.