Horizon, Sea Star executives plead guilty in antitrust probe
Five executives from Horizon Lines and Sea Star Line have agreed to plead guilty and serve jail sentences in charges resulting from an investigation into what the U.S. Justice Department described as a “wide-ranging conspiracy to rig bids, fix prices and allocate market shares for customers transporting goods between the continental United States and Puerto Rico.”
“These are the first charges in the Antitrust Division’s ongoing investigation into collusion in the coastal shipping industry,” the Justice Department said.
It’s not clear how wide-ranging that investigation is. The government has sought information not only from the other Puerto Rico liner carriers Crowley and Trailer Bridge, but also Matson Navigation, a carrier that serves Hawaii and Guam. Matson said earlier this year that it “understands that while the investigation currently is focused on the Puerto Rico trade, it also includes competitive practices in connection with all domestic trades, including the Alaska, Hawaii and Guam trades.”
The government said a one-count felony antitrust charge was made Wednesday in U.S. District Court in Jacksonville, Fla., against each of four shipping executives:
' Peter Baci of Jacksonville. Sea Star’s Web site listed Baci as senior vice president, yield management and Caribbean services.
' Kevin Gill and Gregory Glova of Charlotte, N.C.; and Gabriel M. Serra of San Juan, Puerto Rico, of Horizon Lines. Serra was described in Horizon’s proxy statement earlier this year as senior vice president and general manager, Puerto Rico. Gill and Global were formal managers.
Under terms of their plea agreements, each of the four executives has agreed to serve a jail term that will be determined by the court, pay a $20,000 criminal fine and cooperate fully in the department’s ongoing antitrust investigation. The pleas, fines and jail sentences are subject to court approval.
The four are charged with violating the Sherman Act, which carries a maximum sentence of 10 years imprisonment and fines of $1 million for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
A one-count felony obstruction of justice charge was filed against the fifth shipping executive, Alexander Chisholm, of Jacksonville, with Sea Star, who agreed to plead guilty and serve jail time, subject to court approval. The Justice Department said Chisholm agreed to plead guilty for his conduct in obstructing its investigation of the shipping conspiracy. The charge alleges he destroyed documents on a computer server that were material to the coastal shipping grand jury investigation and responsive to a grand jury subpoena. He faces a maximum sentence of 20 years imprisonment and a fine of $250,000.
Horizon said it would “continue to cooperate fully with the Department of Justice as it moves forward with its investigation.'
Sea Star said the plea agreements involved two former employees who were relieved of their responsibilities on May 5, but did not identify them by name.
“Throughout the course of this investigation, we have cooperated fully with this inquiry,” said Frank Peake, president and chief operating officer of Sea Star. He said the company “is committed to transparency in this matter and values the goodwill of our employees, our customers and our partners.”
“We are committed to prosecuting executives who violate U.S. antitrust laws and harm consumers and competition in the United States,” said Thomas O. Barnett, assistant attorney general in charge of the Justice Department’s antitrust division. “Acts of obstruction of justice threaten the ability of the department to fully uncover and prosecute antitrust crimes, and we will pursue individuals who engage in obstruction with the same vigor as we pursue those who engage in the underlying criminal violations.”
The Justice Department said four individuals charged with violating the federal antitrust laws have agreed to plead guilty for their roles in a conspiracy that began at least as early as May 2002 and continued until as late as April 2008, the object of which was to eliminate competition and raise prices for the movement of goods in the U.S. to Puerto Rico shipping lane. The department charged that the executives sought to eliminate competition and raise prices by agreeing not to compete for one another’s customers; agreeing to rig bids submitted to government and commercial buyers; and agreeing to fix the prices of rates, surcharges and other fees charged to customers.
More than a dozen civil lawsuits have also been filed against carriers in Puerto Rico and Florida since the Justice Department began its investigation.
Anyone with information concerning bid rigging or other anticompetitive conduct in the shipping industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at (202) 307-6694, or the FBI’s Jacksonville Field Office at (904) 721-1211. ' Chris Dupin