Frank Peake, the former president of Sea Star Line, was found guilty this week after a two-week jury trial held in the U.S. District Court for the District of Puerto Rico of participating in a conspiracy to fix rates and surcharges for transportation of freight between the continental United States and Puerto Rico, the Justice Department said.
Peake was convicted of price-fixing in violation of the Sherman Act,
which carries a maximum penalty of 10 years in prison and a $1 million
fine for individuals. The maximum fine may be increased to twice the
gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory
Sea Star pleaded guilty on Dec. 20, 2011, and was sentenced by Judge
Daniel R. Dominguez to pay a $14.2 million criminal fine for its role in
the conspiracy from as early as May 2002, until at least April 2008.
“The coastal shipping price-fixing conspiracy affected the price of nearly every product that was shipped to and from Puerto Rico during the conspiracy,” said Bill Baer, assistant attorney general in charge of the Justice Department’s Antitrust Division. “This successful prosecution shows that the division will hold accountable high-level executives who perpetuate these crimes.”
The department said evidence presented at trial demonstrated Sea Star, Peake and co-conspirators carried out the conspiracy by agreeing during meetings and communications to allocate customers of Puerto Rico freight services and to rig bids and fix the rates and surcharges to be charged to purchasers of water transport for freight moving between the continental United States and Puerto Rico. It said the 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.
In addition to Sea Star, Horizon Lines and Crowley Maritime have pleaded guilty to price-fixing in the Puerto Rico trade. Three Horizon executives and two other Sea Star executive pleaded guilty or have been convicted at trial of charges growing out of the govenrment’s investigation.
The Justice Department said this week its federal antitrust investigation into price-fixing, bid-rigging and other anti-competitive conduct in the coastal maritime freight transport industry is “ongoing.” – Chris Dupin