Merger of Japanese seafood titans worries Alaskans

This article comes from The Anchorage Daily News.  It’s written by Wesley Loy and was published just today.  How it will ultimately effect our favorite fishermen from Deadliest Catch is unknown, but it does seem like it could…

SEAFOOD COMPANIES: Governor wants federal regulators to look into deal.

Gov. Sarah Palin has asked federal antitrust regulators to closely scrutinize a pending merger of two giant Japanese seafood companies with major operations in Alaska.

Palin raises a litany of worries, including the potential for the combined company to consolidate Alaska processing plants, and for local fishermen to receive lower prices for their catches.

Japanese seafood titans Maruha and Nichiro announced in December they plan to merge by October. Media reports out of Japan characterize Maruha and Nichiro as Japan’s largest and third-largest seafood suppliers, respectively.

Palin has written top officials with the U.S. Justice Department’s Antitrust Division, as well as the Federal Trade Commission, raising concerns about the potential impact of the merger on Alaska’s seafood industry and fishing communities.

“Although we are not opposed to the proposed consolidation of the two companies’ global assets, we are concerned about how the merger will impact fisheries in the North Pacific,” says Palin’s June 13 letter.

The federal antitrust regulators already had been conducting a standard review of the pending combination. Immediate comment on Palin’s letter was unavailable Wednesday from the Justice Department and FTC.

Subsidiaries of Maruha and Nichiro have substantial operations in Alaska, with one or both companies heavily involved in processing the state’s most important commercial fish harvests including pollock, crab and salmon.

Among Maruha’s holdings are the huge Westward and Alyeska processing plants at Dutch Harbor, which is the nation’s biggest port for seafood landings. Maruha also operates the Western Alaska plant in Kodiak.

Nichiro owns Peter Pan Seafoods, which operates processing plants in Dillingham, Port Moller, King Cove and Valdez.

Maruha and Nichiro also are involved with three offshore pollock processing vessels known as motherships.

MARKET POWER

Palin requested a “thorough review of the market power and pricing impacts” of the deal, saying it raises concerns about the potential for the merged company to dominate segments of the industry, to consolidate operations, and to pay lower prices to fishermen with limited options for selling their catches.

For example, the combined company would control all three of the motherships, which under federal law have exclusive rights to 10 percent of the enormous Bering Sea pollock catch, Palin wrote.

Also, once Maruha and Nichiro join forces, it would leave only four processors serving the inshore fishing fleet, with rights to 50 percent of the pollock.

“Having only four processors implies that there may be a large degree of market control exerted by each processor,” Palin’s letter says.

She also raises concern that the combined company might consolidate by shifting crab processing from one port to another, which could hurt some communities in terms of jobs, places for local fishermen to sell their catches, and revenue from fish taxes.

Executives for Maruha and Nichiro subsidiaries in Seattle could not be reached Wednesday for comment on Palin’s letter.

Bob Juettner, administrator of the Aleutians East Borough, which includes several villages heavily dependent on commercial fishing, applauded Palin’s letter. He said he’s still not comfortable with company assurances that the merger won’t result in major consolidation or other upheaval.

Some of the borough’s towns are critically dependent on a single fish processing plant, Juettner said. King Cove, for example, relies on the enormous Peter Pan plant there.

“The government should be doing due diligence on these things,” he said.

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