Pacific Seafood Under Fire for Allegedly Fixing Prices Paid to Dungeness Crabbers in Pacific Northwest

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A proposed class action lawsuit claims Pacific Seafood has unlawfully fixed the prices paid to independent commercial crabbers for Dungeness crab caught in the Pacific Northwest.

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The 58-page antitrust lawsuit alleges the five entities who do business as Pacific Seafood have for at least four years, and most likely longer, “monopsonized” the Pacific Northwest’s wholesale-input market and illegally fixed the “ex vessel price” paid to crabbers who sell their catches there.

The price-fixing scheme has substantially reduced crabbers’ earnings and kept reasonably priced Dungeness crab off the market during periods of high demand, which in turn has driven consumers to buy last year’s frozen crab from Pacific Seafood, the suit claims.

By monopsonizing the region’s wholesale-input market—which occurs when a single buyer exists in a market, thus allowing the buyer to set prices lower than it could in a competitive market—Pacific Seafood has positioned itself as the dominant processor of Dungeness crab in the Pacific Northwest and the largest seller of frozen crab in the country, the case states.

Per the complaint, Pacific Seafood has purportedly gained control over Dungeness crab ex vessel prices—i.e., the prices paid to crabbers—through illegal tactics such as refusing to deal with buyers who do not comply with the defendants’ prices, group boycotting of non-compliant crabbers, falsifying the records of prices paid to crabbers and making under-the-table payments to manipulate the opening of the fishing season at lower, more advantageous price points.

As the largest processor of Dungeness crab in the region, Pacific Seafood is the only option for buyers with leftover products not sold to retailers or restaurants, the filing says. Leftover crab must be cooked, processed, frozen or canned quickly to avoid spoilage, and as Pacific Seafood has the processing facilities to do so, this has resulted in the company becoming the “ultimate buyer” of at least 50 percent of all Dungeness crab sold in the region’s market, the lawsuit explains.

This arrangement has made buyers who purchase crabs directly from crabbers beholden to Pacific Seafood and given the company the power to dictate ex vessel prices and punish non-compliant buyers who do not “fall in line,” the suit charges.

Further, Pacific Seafood has become the most significant processor in the region by acquiring and subsequently shutting down competitors’ facilities, buying up enormous dock space, and creating barriers to entry for new buyers, the case argues.

What’s more, Pacific Seafood drives its own profits and keeps ex vessel prices artificially low by delaying the opening of Dungeness crab season, the complaint alleges. By refusing to dictate an ex vessel price to crabbers, or declaring one so low that the fishermen will not accept it, the ensuing stalemate delays the start of the season until the crabbers “break” and take their boats out, the filing says.

The delay limits the availability of reasonably priced fresh crab at the peak of consumer demand, which drives shoppers to buy Pacific Seafood’s frozen crab products instead, the lawsuit shares. Per the suit, the season delay also ensures that crab is not caught when consumer demand is high, allowing the company to “artificially create a buy low sell high situation that benefits only [Pacific Seafood].”

Moreover, Pacific Seafood allegedly keeps control of the region’s wholesale-input market and ex vessel prices through illegal manipulation of buyers and crabbers, punishing those who do not comply with its pricing, the case states.

For one, the company purportedly initiates group boycotts of crabbers who attempt to oppose ex vessel prices, the complaint says. It also allegedly refuses to purchase crabs from non-compliant buyers, and as the dominant processor of Dungeness crab, this can result in dramatic losses for such buyers, the filing explains. In addition, Pacific Seafood also reportedly engages in so-called “tying” arrangements by which the company requires fishers who sell Pacific Seafood one type of fish to also sell it all types of fish that are caught, the lawsuit shares. According to the case, this creates “slave” vessels that must essentially bend to any ex vessel price the company sets.

“Through these illegal means, Pacific Seafood has placed the Pacific [Northwest] Area Dungeness crab wholesale-input market in a pincher that allows it to fix the ex vessel price paid for Dungeness crab and control when and if crabbers even harvest crab,” the suit charges.

Per the complaint, another way Pacific Seafood maintains control over pricing is by officially displaying on purchase receipts a certain ex vessel price it purports to pay its crabbers and later providing the workers with “direct bonuses.” If the ex vessel price dictated by the company is too low to entice other crabbers to ship out at the season’s opening, the “promise of an additional under-the-table payment can provide the necessary impetus” to initiate the rush for the crab supply, the filing states.

The plaintiff, a California resident, has been a commercial fisherman for nearly 20 years, the lawsuit shares. The man has previously sold the Dungeness crab he caught to Pacific Seafood during the 2018-2019 Zone 1 season and had agreed to do so again during the 2022-2023 season, the suit says. However, when the plaintiff refused to comply with the company’s ex vessel price this season, the man was purportedly made the subject of a group boycott, the case explains.

The lawsuit looks to represent any commercial crabbers who, since March 13, 2019, sold ex vessel Dungeness crab caught off the coast of, or landed in, California, Oregon and/or Washington. According to the complaint, there are roughly 1,400 independent commercial crabbers who land Dungeness crab in the Pacific Northwest.

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