The U.S. Department of Justice has identified and begun targeting a broad conspiracy to fix prices on automobile shipments in and out of Baltimore and other U.S. ports, with a Chilean company recently pleading guilty to violating federal antitrust laws in the scheme.
Justice officials reached a felony plea agreement with Valparaiso, Chile-based Compania Sud Americana de Vapores (CSAV), according to documents filed in U.S. District Court in Baltimore. They called it the first charge to land in a continuing antitrust investigation into companies colluding to push up shipping prices.
"Because of the growth in the automobile ocean shipping industry over the past 40 years, the conspiracy substantially affected interstate and foreign commerce," said Bill Baer, assistant attorney general at the Justice Department's antitrust division, in a statement.
The Justice Department said CSAV worked with unnamed co-conspirators "to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipping services of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore."
Documents in the criminal case say the conspiracy occurred between January 2000 and September 2012, but that "exact dates" are unknown.
The extent of the scheme in Baltimore, the only port named in court filings, was not disclosed, though a port official said the diversity of Baltimore's so-called "ro-ro" operations likely provided a buffer against any price rigging that did occur.
"I would think that we have one of the best, if not the best, environment for competitive pricing on international trade for ro-ro business," said James White, executive director of the Maryland Port Administration. "It's really hard to comprehend for me, with the amount of ro-ro carriers and ro-ro ships we have here, how something like that could occur."
Automobile shipments are a major source of business at the port of Baltimore, which is ranked first among 360 U.S. ports for handling automobiles, light trucks and farm and construction machinery. White said more than half of all international roll-on, roll-off carriers call in Baltimore.
CSAV had 17 vessel calls at Seagirt Marine Terminal and 12 at Dundalk Marine Terminal in 2013, a year when many ro-ro carriers operated out of the port.
Officials with CSAV could not be reached. The company's attorney in the case, Steven F. Cherry, did not respond to requests for comment.
The Chilean company is majority-owned by the billionaire Luksic family, Chile's richest, and has been battling steep losses caused by low freight rates, high fuel prices and expensive leases.
The company recently announced that it is preparing to merge with Germany's Hapag-Lloyd, which also operates out of Baltimore. The merger would create the world's fourth-largest container-shipping company. Hapag-Lloyd did not return a request for comment.
Gina Talamona, a Justice spokeswoman, said the conspiracy charge against CSAV was "the first of the charges to be filed as part of the investigation." She declined to identify other companies being investigated.
As part of the plea agreement, CSAV agreed to pay an $8.9 million criminal fine. In addition, the Federal Maritime Commission announced a separate compromise agreement March 5 in which CSAV agreed to pay $625,000 to resolve civil allegations of wrongdoing.
The Justice department said CSAV has "agreed to cooperate" with the criminal investigation. Without a plea deal, the company could have faced up to a $100 million criminal fine, the maximum for corporations charged with price fixing in violation of the Sherman Antitrust Act.
The plea agreement is subject to court approval. A hearing has been scheduled May 1 before Judge George L. Russell III, according to online court records.
Documents in the Justice case say CSAV officials and their co-conspirators established noncompetitive routes between certain customers and conspirators, and "discussed and exchanged prices for certain customer tenders so as not to undercut each other's prices."
Officials later "submitted bids in accordance with the agreements reached," according to case documents. Prosecutors said the result was "collusive and non-competitive prices" on U.S. and foreign automobile shipments.
Port officials have said importing and exporting automobiles accounts for about 1,000 of the more than 14,500 jobs at the port. In January 2014, the port handled 33,321 automobiles and a total of 72,486 tons of roll-on, roll-off cargo.
White said he has not heard concerns from automobile manufacturers about the scheme, nor has he spoken to any shipping companies about the alleged conspiracy.
The biggest automakers using the port are Chrysler, Mercedes, Ford, Subaru and BMW, but it also handles other makes, including under new contracts with Mazda.
Jeremy Barnes, a spokesman for Mazda's North American operations, said in an email that the company is "aware of the situation" and "monitoring it closely."
"We're not taking any actions at the moment," he wrote, "but we'll continue to see where the situation goes and decide our next steps at that time."
Kenn Sparks, a spokesman for BMW of North America, said in an email that he did not know whether BMW has been affected by the scheme.
Other manufacturers did not respond to requests for comment.
Reuters contributed to this article.