Swimming in Pools: Collusion in the Salmon Market

• DOI: http://doi.org/10.1177/0003603X221150368
• Published date: 01 March 2023
• Date: 01 March 2023
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221150368

The Antitrust Bulletin

2023, Vol. 68(1) 137 –153

© The Author(s) 2023

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DOI: 10.1177/0003603X221150368

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Article

Swimming in Pools: Collusion in

the Salmon Market

Danial Asmat*, Margaret C. Levenstein**,

Valerie Y. Suslow***, and Zhihan (Helen) Wang**

Abstract

We study the events alleged in recent Norwegian salmon industry antitrust cases to explore the

relationship between vertical integration, public price indexes, and collusion. The salmon market

provides an intriguing opportunity to study these issues, as there was a vertical merger followed by a

reformulation of the methodology by which prices were reported for a new price index. We explore

whether the confluence of the merger and the creation of the Nasdaq price index is associated with

evidence consistent with collusion.

JEL codes: L13, L41, L42, Q22

Keywords

antitrust, price-fixing, cartels, vertical integration, price index, salmon industry

I. Introduction

On February 19, 2019, the European Commission (EC) carried out raids on several Norwegian com-

panies comprising some of the world’s largest suppliers of farm-raised Atlantic salmon. In a state-

ment confirming its investigation, the EC cited “concerns that the inspected companies may have

violated EU antitrust rules that prohibit cartels and restrictive business practices.”1 Several months

later, the U.S. Department of Justice (DOJ) Antitrust Division launched its own investigation.2

Subsequently, direct U.S. seafood purchasers filed a class action suit against five Norwegian

*Spotify Economics, New York, NY, USA

**University of Michigan, Ann Arbor, MI, USA

***Johns Hopkins University, Baltimore, MD, USA

Corresponding Author:

Margaret C. Levenstein, University of Michigan, Ann Arbor, MI 48109, USA.

Email: MaggieL@umichedu

1150368ABXXXX10.1177/0003603X221150368The Antitrust BulletinAsmat et al.

research-article2023

1. Cliff White, European Commission Investigating Potential Price-Fixing in European Farmed Salmon Sector, SeafoodSource,

Feb. 19, 2019, https://www.seafoodsource.com/news/supply-trade/european-commission-investigating-potential-price-

fixing-in-european-farmed-salmon-sector.

2. Cliff White, US Launches Investigation Into Mowi Price-Fixing Allegations, SeafoodSource, Nov. 19, 2019, https://www.

seafoodsource.com/news/supply-trade/us-launches-investigation-into-mowi-price-fixing-allegations.

138 The Antitrust Bulletin 68(1)

suppliers—Mowi (Marine Harvest), Leroy Seafood, Grieg Seafood, SalMar, and Cermaq Group.3 In

May 2022, these firms agreed to a US$85 million settlement with direct seafood purchasers in the

United States.4

In this article, we study the events alleged in these antitrust cases to explore the relationship between

vertical integration and collusion. In particular, we are interested in whether vertical integration can

facilitate the strategic use of price indices as a collusive device. The salmon market provides an intrigu-

ing opportunity to study these issues because there were both increasing vertical integration and a

redesign of the industry-produced public price index during the period when collusion is alleged. By

early 2012, major Norwegian farmers and the Oslo exchange for fish products were discussing a new

methodology for reporting the spot price of salmon products. This method—formalized in April 2013

when an existing, industry-produced price index was abandoned in favor of the new (Nasdaq) index—

provided vertically integrated salmon farmers the opportunity to report purchase prices directly to the

index for the first time. While we are not able, based on the publicly available evidence, to comment

on the existence of explicit collusion or the intent of these actions, the economics suggests that the

vertical and horizontal combinations observed in this industry made it vulnerable to the anticompetitive

use of industry-produced price indices. Several of the other studies of “protein markets” in this sympo-

sium note the role of price indices in collusive efforts; similar claims have been made in markets as

varied as financial services and airlines, suggesting that attention to their role in facilitating collusion

is warranted, especially in industries with similar consolidated structure.

Section II of the paper examines changes in the economic structure and performance of the salmon

industry in the decades leading up to these charges. Section III briefly reviews the strategic use of price

indices both theoretically and in other industries. Section IV outlines the key facts relevant to the

alleged collusion, including the redesign of the price index, and measures the impact on prices. Section

V concludes with potential implications for antitrust policy.

II. Salmon Industry

Over the period 1999–2019, the price and profitability of Norwegian farm-raised salmon showed an

increasing trend (Figures 1 and 2). To better understand the performance of this market, we need to first

put contours around the market under consideration. There are two types of salmon: Atlantic salmon

and Pacific salmon. Atlantic salmon is mostly “farm-raised” in the sense that the salmon is harvested

under controlled conditions for commercial purposes, excluding wild-caught salmon.5 Pacific salmon

is mostly wild-caught from locations bordering the Pacific, including Canada, Washington state (the

United States), and Chile (Table 1).6 Farm-raised salmon accounts for the majority of worldwide

3. Farm-Raised Salmon and Salmon Products Antitrust Litigation, U.S. District Court, Southern District of Florida, No. 1:

19-cv-21551-CMA, hereinafter referred to as Salmon Antitrust Litigation. For simplicity, we refer to these five firms as the

“cartel members” recognizing that there has been no legal determination that there was a cartel or that these firms engaged

in anti-competitive behavior.

4. Five Major Norwegian Salmon Companies Agree to $85 Million Settlement in Antitrust Case (May 26, 2022), https://www.

preti.com/press/five-major-norwegian-salmon-companies-agree-to-85-million-settlement-in-antitrust-case/. The defendants

in these agreements do not agree to any wrongdoing or anticompetitive allegations.

5. There may be debate about whether wild caught salmon is part of the antitrust product market. See Salmon

Antitrust Litigation, supra note 3, at para 243; citing Courtney Flatt, Why Are Atlantic Salmon Being Farmed in the

Northwest? NatioNal Public radio (Aug. 29, 2017), https://www.npr.org/sections/thesalt/2017/08/29/546803147/

why-are-atlantic-salmon-being-farmed-in-the-northwest.

6. Pan Fish ASA and Marine Harvest N.V. Merger Inquiry, uK comPetitioN commiSSioN (Dec. 18, 2006), para 2.4 and 5.72–

5.75, http://webarchive.nationalarchives.gov.uk/20140402141250/http://www.competition-commission.org.uk/our-work/

directory-of-all-inquiries/pan-fish-asa-marine-harvest-nv/final-report-and-appendices-glossary.