Business

3 ex-shipping executives plead guilty to price fixing

Three former executives for Charlotte-based Horizon Lines on Wednesday agreed to plead guilty in what the Justice Department said was a wide-ranging conspiracy to fix prices in commercial shipping between the continental United States and Puerto Rico.

An executive for another shipping company, Sea Star Lines of Jacksonville, Fla., agreed to plead guilty to the same one-count felony antitrust charge. A second Sea Star executive agreed to plead guilty to one felony count of destroying evidence of the shipping conspiracy, Justice officials said.

The charges are the first in an investigation by the department's antitrust division into collusion in the coastal shipping industry, officials said.

The former Horizon Lines executives charged with violating federal antitrust laws were Kevin Gill, vice president of marketing; Gregory Glova, director of refrigerated cargo; and Gabriel Serra, senior vice president and general manager of the Puerto Rico division.

Each was charged with violating the Sherman Antitrust Act, which carries a maximum sentence of 10 years in prison and $1 million in fines. Under terms of their plea agreements, they agreed to serve a jail term determined by the court, pay a $20,000 fine and cooperate with the investigation.

Chuck Raymond, Horizon's president and chief executive, declined comment on the plea agreements Wednesday, citing the ongoing investigation. Raymond confirmed that Gill, Glova and Serra are no longer with the company.

The conspiracy began at least as early as May 2002 and continued until as late as this April, Justice officials said. The goal was eliminating competition and raising prices for shipping goods between the mainland U.S. and Puerto Rico.

Since the investigation began, multiple companies have filed antitrust lawsuits against Horizon and other shippers, alleging price fixing on their routes.

For instance, Rhythm of Life Cosmetics, which operates Maui Tropical Soaps, named Horizon as a co-conspirator in a lawsuit that claimed the 3,800 percent increase in fuel surcharges by the two companies since 1999 were much higher than the actual rise in fuel prices, The Associated Press reported in June.

In addition, La Esperanza Bus Line filed an antitrust lawsuit against Horizon and other shippers in May, seeking $100 million in damages.

Horizon Lines and a handful of other carriers compete in a market ruled by the Jones Act, a 1920 federal law that limits competition by requiring ships sailing between U.S. ports to be U.S.-owned.

Federal agents raided Horizon's SouthPark-area headquarters in April, serving search warrants and a grand jury subpoena.

The Justice Department has charged that “executives sought to eliminate competition and raise prices by agreeing not to compete for one another's customers; agreeing to rig bids submitted to government and commercial buyers; and agreeing to fix the prices of rates, surcharges and other fees charged to customers,” officials said in the statement.

Horizon Lines has nearly 1,900 employees, including about 75 in Charlotte. The company had a profit of almost $29 million last year on revenue of $1.2 billion, but in July reported a 25 percent drop in second-quarter profits.

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