Crowley Liner Services pleaded guilty and was sentenced to pay a $17 million criminal fine for its role in a conspiracy to fix prices in the trade between the U.S. mainland and Puerto Rico, the U.S. Justice Department said.
According to a one-count felony charge filed in the U.S. District Court for the District of Puerto Rico, Crowley Liner Services engaged in a conspiracy to fix base rates for ocean transport of certain freight between the continental United States and Puerto Rico from as early as January 2006 until at least April 2008.
According to the charges, Crowley Liner Services and co-conspirators carried out the conspiracy by agreeing during meetings and discussions to fix the base rates to be charged to non-government transportation purchasers in the U.S.-Puerto Rico trade. The Justice Department said the carrier 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 was sentenced to pay a $14.2 million criminal fine. On March 22, 2011, Horizon Lines was sentenced to pay a $15 million criminal fine. Originally Horizon was fined $45 million, but last year a court agreed with the government’s decision to reduce the fine and allow Horizon to pay it over a five-year period because Horizon was in poor financial condition.
Additionally, five shipping company executives—Gabriel Serra, Peter Baci, R. Kevin Gill, Gregory Glova and Alex G. Chisholm—pleaded guilty. Frank Peake, former president of Sea Star Line, was charged on Nov. 17, 2011, and is scheduled to stand trial on Jan. 14, 2013, the Justice Department said.
“We regret having any involvement whatsoever in this activity,” said Michael Roberts, senior vice president and general counsel of Crowley Maritime Corp. “Such conduct is contrary to our explicit policies, and violates our core values. It is absolutely unacceptable.”
In a statment Crowley said it has enhanced its antitrust compliance program, intensifying training and applying it to a broad base of employees. This program follows best practices that include computer-based learning, small group and person-to-person counseling, and extensive auditing.
“We are confident that the actions taken will prevent such activities in the future,” Roberts said. “It is also important to move beyond this matter, and focus on growing the business and providing great service to our loyal customers.”
Crowley noted that it has also resolved nearly all potential civil claims related to this matter. – Chris Dupin
Crowley fined $17 million for Puerto Rico price-fixing
