The End of the Lobster Consent Decree?

by Nicholas Walsh, PA

Remember a few years back when a bottle of vitamins cost an arm and a leg? There was a simple explanation. Six big vitamin manufacturers quietly got together and decided they could all make more money if they could agree on prices. They did just that, until they were busted.

In the United States it is generally illegal for businesses to collude in setting prices, or setting sales territories, or otherwise making arrangements to limit competition. The federal Sherman Antitrust Act, enacted in 1890, is the leading law. Antitrust law does not limit competion as such, but only unfair competition. As the Supreme Court wrote, “The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.”

There are exceptions, of course, usually for industries who have won state-sanctioned protection from competition. For example, milk prices in many states are set by law, and it is illegal to sell milk below that price. The dairy lobby is powerful, and perhaps the higher prices we may pay for a gallon of milk is the societal cost of keeping small farms intact. Or perhaps it is just a price imposed on consumers by an industry with friends in high places.

1957 was a bad year for the lobster industry. The harvest was a solid 20 million pounds, which used to be a pretty good year until 100 million pounds became the new normal. The price, however, was awful, and the industry decided to do something about it.

Or so claimed the United States Department of Justice, which in October 1957 sued the Maine Lobstermen’s Association, its president Leslie Dyer, and “persons, firms and businesses not named as defendants herein” as defendants in an antitrust suit. The allegation was that beginning in June 1957: the defendants and the co-conspirators have engaged in a combination and conspiracy to fix, stabilize and maintain the prices for live Maine lobsters sold by both MLA member and non-member lobstermen to lobster dealers, in unreasonable restraint of the aforesaid interstate trade and commerce in live Maine lobsters, in violation of Section 1 of the Sherman Act.

The illegal acts, the complaint continued, included fixing a minium price for lobsters, refraining from catching lobsters until the minimum price was reached, and conspiring “to induce and compel all Maine lobstermen . . . to adhere to the terms of the conspiracy herein before alleged.”

The result of the complaint was a consent decree, docketed in August 1958. A consent decree is a judgment entered into by agreement of the parties, and this judgment enjoined the defendants from entering into an agreement to set the lobster price or terms of lobster sale, or limiting competition, or urging others not to sell for a given price, or not fishing. The judgment applied not merely to the MLA and President Dyer, but also to “all persons . . . .who shall have received actual notice of this Final Judgment by personal service or otherwise.” The judgment also required the MLA to post the particulars of the judgment by newspaper advertisement. So the consent decree applied, in effect, to every Maine lobsterman.

The consent decree still applies, all these many years later. The tie up of 2012, while it was not of long duration, might reasonably come to the attention of a U.S. Attorney wondering if the Decree has been violated.

But here’s the interesting thing. When I called the United States District Court seeking a copy of the complaint and the judgment, the clerk told me she had just retrieved a copy of this dusty court file from the National Archives. Why had she done so? Because, she told me, a lawyer acting for the Maine Lobstermen’s Association intends to file a motion to set aside the consent decree.

Even more intriguing, she told me the motion, which has not yet been docketed, is to be filed jointly with the Department of Justice. In other words, the MLA and the Department of Justice are getting together to ask the court to alter, amend or possibly terminate the consent decree.

It has been my experience that negotiations to reach consent as to a court action often fail, and it is too soon to say that this consent motion will actually be filed. And I don’t know the details – I don’t know how the 1958 consent decree would be modified, assuming the motion is filed and assuming a District Court judge signs off on the matter.

This is really interesting stuff, especially if you are wondering what to do with a lobster glut. I can’t help but wonder if the Maine lobster fishery, which surely has as much political clout as the dairy industry when it comes to getting laws on the books, may be manuvering for some sort of protection from the Sherman Act. Stay tuned.