Tuesday, May 19, 2015

Not Guilty - Shipping Executive Accused of Antitrust Freight Rate Fixing Acquitted

(but Three Lines Already Fined $46 Million for US - Puerto Rico Cartel)
Shipping News Feature

US – Thomas Farmer, former Vice President of Price and Yield Management at Crowley Liner Services, has been acquitted of a conspiracy to fix freight rates and shipping surcharges between the continental US and Puerto Rico, closing a case bought forward by the Department of Justice's Antitrust Division which involved some of the biggest names in the provision of logistics in the US coastal water freight industry.

In March 2013, the DOJ indicted Farmer, accusing him of conspiring with two major competitors between 2005 to 2008, to engage in anti-competitive practices in the hope of suppressing and eliminating competition, in violation of the Sherman Act. It had been alleged that Farmer participated in the meetings, conversations, and communications where the conspirators agreed to allocate customers, fix and inflate prices and rig bids submitted to government and commercial customers, similar to the dozens of cases of proven antitrust practices seen recently throughout the freight transportation industry around the world.

As a result of the investigation, the three largest sea freight carriers serving routes between the United States and Puerto Rico have already pleaded guilty and been ordered to pay more than $46 million in criminal fines for their roles in the conspiracy. On March 22, 2011, Horizon Lines was sentenced to pay a $15 million; on December 20, 2011, Sea Star Line was sentenced to pay a $14.2 million; and on August 1, 2012, Crowley Liner Services, was sentenced to pay $17 million.

Additionally, five shipping company executives— Senior Vice President and General Manager for the Puerto Rico Division Gabriel Serra, Vice President of Marketing R. Kevin Gill, and Marketing and Pricing Director for Puerto Rico Gregory Glova (Horizon Lines) and Senior Vice President of Yield Management Peter Baci, Assistant Vice President of Yield Management Alexander Chisholm (Sea Star Lines), have already pleaded guilty. On January 30, 2009, Baci was sentenced to 48 months in prison and fined $20,000. On May 12, 2009, Chisholm was sentenced to 7 months in prison and fined $4,000; Serra, sentenced to 34 months and fined $20,000; Gill, sentenced to 29 months and fined $20,000; and Glova, sentenced to 20 months and fined $20,000.

In January 2013, a San Juan jury found former President of Sea Star Lines, Frank Peake, guilty for his role in the conspiracy. After a two week trial, Peake was sentenced to serve five years in prison and ordered to pay a $25,000 criminal penalty.

United States v. Thomas Farmer - 3:13-cr-00162

To see a snapshot of the recent cases brought under antitrust legislation across the world type a suitable keyword (cartel – antitrust etc.) into the News Search box at the head of the page.