Russia’s anti-monopoly service is reportedly pointing the finger at the role of Norwegian exporters as it investigates alleged anti-monopoly activities in Russia’s fish market, sources told Undercurrent News.
The agency has been requesting information from Norwegian exporters and the Norwegian Food Safety Authority as part of its investigation, a spokesperson for Norway’s competition authority confirmed.
“Russia’s Federal Anti-Monopoly Service (FAS) said it wanted to know more about the agreements that Norwegian fish exporters have with Russian importers,” Kjell Sunnevag, director of external relations at the authority, told Undercurrent News.
“We have acted to facilitate their queries, and have asked exporters for information on their behalf,” Sunnevag said.
The Norwegian parties have been highly cooperative and accommodating, and the Norwegian competition body does not see any grounds to start an investigation of its own, he said.
As part of the investigation, FAS is reportedly looking at a strategic partnership agreement that Marine Harvest and Russian Fish Company (RFC) signed in 2011, said a Russian industry source.
In the agreement, the two companies lay down their goal for Marine Harvest to gain 45% of the Russian fresh salmon market by 2017.
Undercurrent was given what appears to be a leaked copy of the said document. Dated 2011 and entitled Strategic Partnership Agreement, it lays out a joint goal for Marine Harvest to control 25% of the market share for fresh salmon into Russia by January 2013.
This should be upped by 5 percentage points every year, to 45% by 2017, says the document. “It is [Russian Fish Company’s] responsibility to obtain such market shares in their commercial offering, promotion and selling of the products,” it stated.
The document also stated that at least 80% of RFC’s fresh salmon purchases must be supplied by Marine Harvest.
“It’s correct that we have a partner agreement with Russian Sea Group,” Marine Harvest’s CEO Alf Helge Aarskog told Undercurrent.
“It is approved by Russian and Norwegian lawyers, and we have been entirely open about it to those authorities that have asked for documents, and we have therefore nothing to hide.”
In January 2012 FAS started investigating allegations that Russia’s largest fresh fish importers and the country’s veterinary authority Rosselkhoznadzor colluded to unfairly protect their market interests.
According to those suspicions, Rosselkhoznadzor has been using makeshift sanitary pretenses to favor Russia’s largest importers, for instance by shutting out exporters who would not sign exclusive agreements with those importers.
The investigation is still going on. If found guilty, the salmon importers could stand to be fined 1-15% of their turnover.
In 2012 like today, the investigation takes place just as Rosselkhoznadzor is warning Norway that their fresh fish exports could be blocked due to unsatisfactory sanitary conditions and lack of compliance with certificate requirements.
However, FAS’ inquiry into the role of Norwegian exporters is a new twist.
“For the first time, the FAS claims that the problem could be partly due to the Norwegians, and not just Russia as previously thought,” said a Russian industry source, who added that FAS travelled to Norway in March “to carry out some analyses”.
In Russia, any market share of more than 35% will attract the scrutiny of FAS, which will determine whether it is in breach of fair competition rules, said this source.
Undercurrent tried repeatedly to get a comment from FAS on the matter, but unsuccessfully. The agency has no authority to investigate Norway, but it can send requests for information.
Another industry player in Russia dismissed the allegations as hot air. Most of the large companies export to Russia on contracts, and while Marine Harvest sold maybe some 22,000t to Russia last year, Leroy sold even more, he said. Marine Harvest’s annual report shows it sold 4% of its sales to Russia.
According to the document seen by Undercurrent, RFC committed to help Marine Harvest export salmon from Chile, the Faroes and Scotland into Russia, if demand exists, and to assist Marine Harvest in getting export approval to Russia for their harvesting plant R 110.
In return the document stated that Marine Harvest will assist RFC and affiliates – which include Russian Sea’s aquaculture division – in “developing the aquaculture sector in Russia and provide information on advanced technologies in salmon and trout farming”.
Marine Harvest will also provide “RFC or affiliates with front line technological and processing decisions in the aquaculture field”.
“It is our mutual agreement re our business. We don’t want to discuss it,” said a spokesperson at Russian Sea Group.
Whatever the significance of this partnership or of FAS’ inquiries, it is the latest twist in a never-ending saga over the complexities of exporting to Russia.
When the FAS investigation first started, a newly formed union of fish processors, Fish Union, pointed the finger at members of Fish Alliance – who included the big four salmon importers RFC, Severnaya, Tehnolat and Atlant-Pacific – for controlling the salmon import market unfairly by shutting off exporters that did not sell to them.
Those four importers are now members of Fish Union, and the latter has since gone silent, failing to return a request for comment by the time of publication.
Then like now, these allegations came against a background of uncertain export conditions.
During the Brussels seafood show, Rosselkhoznadzor convened a meeting with Norwegian exporters to warn them of its dissatisfaction with what it says are “systemic violations” of microbiological requirements.
The Norwegian Food Safety Authority has since said it had sent information to Rosselkhoznadzor regarding facilities belonging to three salmon/trout exporters and two whitefish exporters: Tobo Fisk, Brodrene Sperre, Slakteriet, Brandasund Fiskeforedling and Leroy Aurora.
Rosselkhoznadzor has not said whether those facilities risk being shut off or not, said NFSA.
Meanwhie, a Norwegian news website also recently published allegations of ‘dirty dealings’ in the Russian fish market.
In an article entitled, “The dirty game over Russia”, journalist Aslak Berge said the trade of Norwegian exports to Russia “does not stand the daylight”.
In the article a salmon trader, speaking anonymously, pointed out eight points which he said illustrate how exports to Russia are controlled.
First, he said, and echoing the FAS investigation, “bacteria findings” by Rosselkhoznadzor are used to shut off Norwegian packing houses for longer periods of time.
Russia also holds an import statistic file listing which records who sells to whom, at what price and what volumes, he said. According to this trader, this list is reportedly abused by certain importers who look at it, draw conclusions and travel across Norway harassing producers “if you don’t behave authorities will shut off your plant”. Those who ignore the warning are duly shut out, he said, adding that NFSA “duly accepts this”.
The other side of the coin is that the few large importers who remain in the market, become so powerful that they can regulate the market price and agree on buying and sales prices between themselves, this source told iLaks. They also ensure that no competitors emerge by blocking all direct contact between Norwegian distributors and supermarket chains, as is usually the case in other countries, he claimed.