Crowley Pleads Guilty to Puerto Rico Price-Fixing

Crowley Pleads Guilty to Puerto Rico Price-Fixing

Crowley Liner Services pleaded guilty and was sentenced to pay a $17 million criminal fine for conspiring with other carriers to fix prices between the U.S. mainland and Puerto Rico.

The Jacksonville-based carrier pleaded guilty to a one-count felony charge in U.S. District Court in San Juan. It was the latest in a series of guilty pleas in the Justice Department’s investigation of price-fixing by carriers in the U.S. mainland-Puerto Rico trade.

Sea Star Line pleaded guilty to an antitrust violation in late 2011 and was sentenced to pay a $14.2 million fine. Earlier last year, Horizon Lines pleaded guilty and was sentenced to a $45 million fine, later reduced to $15 million.

Five former company officials — Gabrel Serra, R. Kevin Gill and Gregory Glova of Horizon and Peter Baci and Alex Chisholm of Sea Star — pleaded guilty to antitrust violations or hiding evidence. Former Sea Star President Frank Peake was indicted on an antitrust charge last November. His trial is scheduled to start on Jan. 14.

Crowley pleaded guilty to conspiring to fix rates from as early as January 2006 until April 2008, when federal agents raided offices of the three carriers. The carriers were accused of coordinating bids and rigging rates.

Crowley said its involvement “was substantially more limited in time and scope than that of two competitors that previously entered guilty pleas.” Horizon and Sea Star admitted antitrust violations dating to as early as 2002.

Contracts for which Crowley was accused of fixing rates represented less than 5 percent of the commercial trade during 2006-2008, and included no government business, the company said.

In a statement, Crowley said the company had never previously pleaded guilty or been found guilty of criminal activity, but said it offered no excuses. 

“We regret having any involvement whatsoever in this activity,” said Michael Roberts, senior vice president and general counsel of Crowley Maritime Corp., parent company of Crowley Liner Services. “Such conduct is contrary to our explicit policies, and violates our core principles. It is absolutely unacceptable.”

In a joint sentencing memorandum, the Justice Department said it will not pursue additional charges against Crowley and related entities. Prosecutors also recommended against probation, because improvements in Crowley’s corporate compliance program “greatly reduce the risk of recidivism.” 

Crowley said it has strengthened its antitrust compliance program by intensifying training, applying it to a broad base of employees, and using “best practices that include computer-based learning, small group and person-to-person counseling, and extensive auditing.”

“We are confident that the actions taken will prevent such activities in the future,” Roberts said.

Crowley also said it has resolved nearly all potential civil claims dating to the antitrust case.

In addition to the criminal fines, Horizon, Sea Star and Crowley paid a total of more than $57 million to settle class-action civil antitrust lawsuits by direct and indirect customers. Carriers entered additional settlement with individual shippers that opted out of the class actions.

Contact Joseph Bonney at jbonney@joc.com. Follow him on Twitter @josephbonney.