Sea Star Pleads Guilty to Price-Fixing Conspiracy in Coastal Freight Services Industry
Alexandra Kay | Bloomberg Law
Press Release, U.S. Federal Trade Commission, Florida-Based Sea Star Line LLC Agrees to Plead Guilty and its Former President is Indicted for Price Fixing on Coastal Freight Services Between the Continental United States and Puerto Rico
The U.S. Federal Trade Commission recently announced that Sea Star Line LLC agreed to plead guilty to charges that it conspired to fix prices in the coastal water freight transportation industry. Under the plea agreement, which is subject to court approval, Sea Star agreed to pay a $14.2 million criminal fine. Sea Star’s former president, Frank Peake, was also indicted by a federal grand jury for his role in the conspiracy.
Sea Star transports cargo shipments on scheduled ocean voyages between the continental United States and Puerto Rico. According to the charges, Sea Star conspired to fix rates and surcharges for water transportation of freight between the continental United States and Puerto Rico from May 2002 until at least April 2008. Peake was charged with participating in the conspiracy from at least late 2004 until April 2008.
The charges arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive behavior in the coastal water freight transportation industry. In connection with the investigation, on April 30, 2011, Horizon Lines LLC was sentenced to pay a $15 million criminal fine. Five former shipping executives from Sea Star and Horizon Lines have also been sentenced to pay a total of nearly $85,000 in criminal fines and to serve more than 11 years in prison, collectively.
Under Section 1 of the Sherman Act, 15 U.S.C. § 1, the price-fixing conspiracy charges for a corporation carry a maximum penalty of $100 million, while the penalty for an individual can be up to $1 million and 10 years in prison. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either amount exceeds the statutory fine.
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