Shipping companies pay $3.4 million to resolve fraud allegations over Postal contracts

by Ben Vernia | March 10th, 2014

On March 7, the Department of Justice announced that two shipping companies have paid a combined $3.4 million to resolve allegations that they fixed prices on Postal Service contracts to ship mail between the U.S. mainland and Puerto Rico. According to DOJ’s press release:

Sea Star Line LLC and Horizon Lines LLC have agreed to resolve allegations that they violated the False Claims Act by fixing the price of government cargo transportation contracts between the continental United States and Puerto Rico, the Department of Justice announced today. Under the settlement agreements, Sea Star Line has agreed to pay $1.9 million, and Horizon Lines has agreed to pay $1.5 million.

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The government alleged that former executives of the defendant ocean shippers used personal email accounts to communicate confidential bidding information, thereby enabling each of the shippers to know the transportation rates that its competitor intended to submit to federal agencies for specific routes. This information allowed the shippers to allocate specific routes between themselves at predetermined rates. Among the contracts affected were U.S. Postal Service contracts to transport mail and Department of Agriculture contracts to ship food. Both Sea Star Line and Horizon Lines previously pleaded guilty, in related criminal proceedings, to anticompetitive conduct in violation of the Sherman Act.

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